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Overview – China’s leadership has signalled that policy will be loosened further, which will provide a near-term prop to activity. But we still expect China’s growth to slow next year, because of the more challenging external environment and a further …
17th December 2024
An unexpected loss of momentum China’s economy appears to have slowed last month, despite tailwinds from recent policy easing. Growth still looks on course to pick up this quarter, but the disappointing November data underscores the challenge policymakers …
16th December 2024
Monetary easing still struggling to put a floor under borrowing Broad credit growth stabilised last month, after hitting a 21-year low in October. But bank loan growth continued to slide to fresh lows, despite lending rates on new loans having been …
13th December 2024
B ut a dramatic shift in policy approach still unlikely The Central Economic Work Conference (CEWC), an annual gathering at which China’s leadership discusses targets and priorities for the following year, concluded yesterday. We discussed the key …
Note: When this Update was first published, China's state media had relayed the content of the CEWC readout but the readout itself had not been published. The Update has now been updated to reflect the contents of the readout that was published late on …
12th December 2024
Export volumes have further to rise, despite tariff threat Export growth slowed sharply last month but we doubt this signals the end of China’s recent export boom. We expect exports to accelerate again in the coming months, supported by gains in …
10th December 2024
Leadership alters formal characterisation of monetary policy The Politburo has just concluded its December meeting, which focuses foremost on economic affairs. After 14 years of monetary policy being officially characterised as “prudent”, the meeting …
9th December 2024
This page has been updated with additional analysis since first publication. Stimulus is propping up inflation Headline CPI inflation fell but this was mainly driven by easing upward pressure on food prices. Core inflation edged up and PPI deflation …
New rules are more restrictive but leave loopholes The updated US semiconductor export controls published on Monday will further limit China’s ability to manufacture advanced semiconductor chips. The 200+ pages of legislation contain many intricacies, but …
6th December 2024
This report was first published on the 2 nd December covering the official PMIs and the Caixin manufacturing PMI. We added commentary on the Caixin services and composite PMIs on the 4 th December. Growth continues to pick up, led by manufacturing The …
2nd December 2024
China Chart Pack (Nov. 24) …
29th November 2024
We held an online session on US import tariffs on 26th November. (See a recording here ). In this Update we answer the questions we were most asked. What are Trump’s motives for threatening tariffs and will he follow through? Trump has spoken about using …
Trump links some tariffs to the drug trade Earlier this week, President Trump threatened to impose an “additional” 10% tariff on imports from China, along with tariffs on Mexico and Canada. We gave our initial thoughts here , noting that because the …
We’re launching an updated version of our China Activity Proxy this month, alongside an interactive dashboard that gives clients access to the data. Our expanded model suggests that China’s growth so far this year has been weaker than we originally …
27th November 2024
The China Activity Proxy (CAP) is our attempt to track the pace of economic growth in China without relying on the official GDP figures. It is based on a set of carefully selected low-profile indicators that capture activity across a broad spectrum of the …
President-elect Donald Trump’s first threatened tariffs since the election are designed to extract concessions on drug trafficking and illegal border crossings, which means it may be possible for the countries targeted – Canada, Mexico and China – to head …
26th November 2024
We discussed the global impact of higher tariffs in a Drop-In on Tuesday, 26th November. Click here to watch the 20-minute online briefing. In this Focus, we construct a framework to explore the channels through which an import tariff works, which we use …
25th November 2024
Local governments ramp up support Efforts by the Ministry of Finance (MoF) to get local governments to make greater use of their existing fiscal space are starting to pay off. Data published this week showed that fiscal spending accelerated sharply in …
22nd November 2024
What next after the fiscal flop? Investors were not impressed by the fiscal measures announced last Friday, at least judging by the performance of Chinese equities – the Hang Seng index has fallen 6.1% so far this week. This disappointment is …
15th November 2024
Economy regains momentum as consumers step up China’s economy improved further at the start of Q4, thanks to stronger-than-expected consumer spending. We think faster fiscal spending will support a continued cyclical pickup in activity overing the coming …
An oil market that has mostly looked through a year of Middle East conflict now faces fresh, Trump-shaped, uncertainty. The president-elect’s campaign pledges on everything from Iran and Israel to climate policy to household energy bills appear to raise …
14th November 2024
Stimulus too small to turn around credit growth Both bank lending and broad credit growth hit fresh lows in October in a sign that monetary easing hasn’t done enough to drive a substantial turnaround in private credit demand. And after last week’s …
12th November 2024
This page has been updated with additional analysis since first publication. Deflationary pressures ease slightly but still pose a risk Headline CPI and PPI inflation both fell further in October. But core inflation edged up and factory gate prices fell …
11th November 2024
Today’s fiscal announcement was far smaller and less detailed than many had hoped for. The explanation, we think, is that China’s leadership sees less need for stimulus than most commentators (we’re with the leadership on this). Its priority instead seems …
8th November 2024
Exporters could do even better in the near-term We published our initial thoughts on the impact of a second Trump presidency on China’s economy here . Counter-intuitively, perhaps, we concluded that there would be initial upside for exporters, as US firms …
Unless there’s more to come later this evening, today’s fiscal announcement is another disappointment for those expecting substantial stimulus. The key measure announced at a press conference earlier is a refinancing of local government debt. Local …
Large US tariffs would hurt China’s export sector but less than many suppose. We estimate that the direct impact of even a 60% US tariff on goods from China would be well under 1% of China’s GDP . The bigger challenge for policymakers could be the …
7th November 2024
Exports to remain robust in the near term despite Trump victory Export values grew y/y at the fastest pace in more than two years, and export volumes picked up too. We expect shipments to stay strong in the coming months – any drag from potential Trump …
It’s still unclear if consumption will be prioritised Over the weekend, the Vice Finance Minister confirmed that the NPC Standing Committee is set to approve a fiscal package at its upcoming meeting , set to last from Monday to Friday of next week. At a …
1st November 2024
The economy has already regained some momentum on the back of increased policy support. But the extent of the recovery hinges on the scale of fiscal stimulus, which remains uncertain. Our base case is for growth to pick up over the coming quarters before …
Weak external demand results in a sharp slowdown Hong Kong’s economy contracted sharply in Q3. GDP surprised significantly to the downside, with growth of 0.4% q/q in Q2 more than reversed by a 1.1% q/q fall in Q3 (Bloomberg median: +0.2%, CE: -0.2%). In …
31st October 2024
This report was first published on 31 st October covering the official PMIs. We added commentary on the Caixin manufacturing PMI on 1 st November and on the Caixin services and composite PMIs on 5 th November. Economy continues to regain momentum The PMIs …
EMs are playing a growing role as substitute markets for Chinese exporters that face rising trade barriers in DMs. A second trade war with a re-elected President Trump would only accelerate that shift. It is plausible that a sizeable portion of the loss …
30th October 2024
Our China Activity Proxy suggests that the economy’s growth picked up in September, bringing Q3 growth in-line with official estimates. While this acceleration was broad-based across sectors, the main driver was financial services activity which was …
29th October 2024
Fiscal package may be revealed in two weeks At its 12 th October press conference, the Ministry of Finance (MoF) offered some reassurances that fiscal spending would pick up in the final months of this year and stay supportive into 2025. But it didn’t …
25th October 2024
We held online Drop-In sessions this week to discuss how we factor the US election into our thinking on the macro and market outlook for the US and other parts of the world. See here for a recording of the session focused on the US and here for the rest …
24th October 2024
The depreciation pressure on the renminbi has abated over recent months and the USD/CNY rate is currently trading around our end-2024 target of 7.10. But with US interest rate expectations on the rise again, China’s stimulus announcements continuing to …
21st October 2024
The PBOC continues to support the economy Today’s reductions to both the one-year and five-year Loan Prime Rates (LPR) continue the PBOC’s efforts to support the economy. We expect additional easing to follow in the coming quarters, but this is unlikely …
No gamechangers, but some new approaches The housing ministry’s press briefing on Thursday left investors understandably underwhelmed: there were no substantial new measures and little new detail on plans to support the property sector. The Hang Seng …
18th October 2024
Recovery still shaky, underscoring need for fiscal boost After slowing in Q2, the economy regained some momentum last quarter. A boost from fiscal stimulus should help narrowly meet the annual growth target this year and support activity in the coming …
Credit growth still slowing, highlighting need for larger fiscal response Despite monetary easing and a pick-up in government bond issuance, both broad credit and bank loan growth hit fresh lows in September. While the PBOC will continue to loosen policy, …
14th October 2024
Exports still strong but headwinds emerging Export growth slowed last month but remained resilient, with volumes still rising at a double-digit pace. We think shipments will stay strong in the near term, supported by gains in export competitiveness. …
Fiscal boost needed as deflationary pressures build CPI inflation fell in September, as an increase in food inflation was outweighed by further decreases in energy and core inflation. Meanwhile, producer price deflation deepened further on the back of …
China’s Finance Ministry has pledged to significantly increase government debt, as well as ensure that RMB2.3trn in unused funds (equivalent to 1.6% of GDP) are spent by year-end. The latter should ensure that GDP growth ticks up in Q4 and that the annual …
12th October 2024
Consumer support and a larger deficit Tomorrow’s press conference will provide a platform for the Ministry of Finance (MoF) to reveal its fiscal plans. The stakes are high - most observers agree that recent stimulus announcements won’t amount to much …
11th October 2024
China’s economy has some cyclical spare capacity that could be filled with fiscal stimulus. But its troubles are mostly structural. The finance ministry won’t solve them on Saturday. China’s finance minister is a long way down the pecking order of Party …
9th October 2024
CNY nears strong end of its trading band We regret to inform our readers that the chart and analysis in this section contained errors. We have added a corrected chart below. The original chart and analysis have also been retained for reference but should …
4th October 2024
China’s recent stimulus announcements are still at the top of many investors’ minds, at least judging by the high level of client interest in the online briefing we ran on the topic yesterday. We’ve wrapped up our answers to the most common questions we …
3rd October 2024
Despite driving a surge in developer stock prices, the property support measures announced so far aren’t that different from previous efforts and are unlikely, on their own, to deliver much better results. Achieving the Politburo’s recently upgraded goal …
2nd October 2024
Note: the last chart was previously uploaded incorrectly and was corrected on the 8th October The pivot toward stimulus reduces near-term risks and should provide some much-needed support to an economy struggling with a softening labour market and a deep …
1st October 2024
