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According to our detailed estimates, capital flows out of China were stable last month after rising slightly in July. Global investors continued to pull money out of the country, but Chinese households and firms amassed foreign assets at a slower pace. … …
20th September 2016
Banks, firms and households have all become more upbeat on the economic outlook recently, according to the latest People’s Bank surveys released over the weekend. In particular, households appear more eager to both consume and purchase property than at …
19th September 2016
A renewed pick-up in credit growth last month will add to the growing sense among investors that the near-term outlook for China’s economy is fairly bright. Credit growth is still likely to slow over the coming months as the PBOC refrains from further …
14th September 2016
Better-than-expected data out of China today raise hopes that policymakers’ efforts to reverse the slide in investment growth are seeing some success. … Activity & Spending …
13th September 2016
Inflation softened by more than expected last month but we think the decline will prove short-lived and doubt that it will spark further monetary easing by the People’s Bank. … Consumer & Producer Prices …
9th September 2016
A pick-up in export growth points to some welcome improvement in external demand while the sharp recovery in import growth hints at stronger domestic demand. … Trade …
8th September 2016
Consumer price inflation is likely to have fallen further in August, dragged down by a drop in food price inflation. But this will mask a continued pick-up in broader price pressures that is set to drive a rebound in inflation in the coming months. … Fall …
7th September 2016
Another drop in the value of China’s foreign exchange reserves points to continued intervention by the People’s Bank. It also suggests that capital outflows remain sizeable and so that the renminbi will stay under pressure in the coming months. … FX …
A number of voices have begun loosely using the term “liquidity trap” to argue that stronger credit growth in China has failed to provide a greater boost to output because firms are hoarding cash rather than spending it. But the money supply data being …
2nd September 2016
A number of commentators have recently drawn attention to a rapid rise in lending by the People’s Bank to domestic banks and suggested that this represents a form of stealth credit expansion or, alternatively, “backdoor QE”. In fact, it signals not a turn …
1st September 2016
For the first time since November 2014, both manufacturing PMIs are now at or above 50, the line that – in theory at least – separates expansion from contraction. This ought to boost sentiment and suggests that earlier policy easing is still being …
Data released today show home prices in Hong Kong rising for a fourth straight month in July, raising hopes that the city’s property market correction may be over. But with interest rates set to rise and the supply of housing likely to pick up, we think …
31st August 2016
The rally in China’s stock markets appears to be running out of steam. Meanwhile, further FX intervention by the PBOC has helped to keep the renminbi relatively stable against the US dollar, though it continues to weaken in trade-weighted terms. Market …
26th August 2016
The Capital Economics China Activity Proxy (CAP) points to a further acceleration in growth last month. Recent unusually hot weather may have played a part in lifting the CAP by giving a short-lived boost to the component measuring electricity demand. But …
25th August 2016
Private investment in China may not have slowed quite as rapidly this year as the official figures suggest. Nonetheless, the downward trend remains worrying and is likely to weigh on future growth. … Private investment slowdown overstated but still …
24th August 2016
Capital flows out of China accelerated in July to their fastest since February, according to our latest detailed estimates. The People’s Bank responded with heavier intervention so that, despite increase downward pressure, the renminbi stabilised after …
18th August 2016
Residents of the Yangtze River Delta (YRD) can look forward to unusually clear skies as restrictions on industry to limit pollution ahead of next month’s G20 summit come into effect. According to media reports, notices to shut or reduce output for two …
17th August 2016
Today’s approval of a link between stock markets in Hong Kong and Shenzhen may boost market sentiment and is a welcome signal that policymakers are keen to press on with financial reform as concerns over market volatility and capital outflows fade. But …
16th August 2016
Today’s GDP figures show that Hong Kong’s economy rebounded strongly in the second quarter. However, the economy faces a number of headwinds and we expect growth to slow again in the coming quarters as the city’s property sector downturn continues. … Hong …
12th August 2016
Broad credit is still expanding at a faster pace than during most of the past couple ofyears. But the impact of earlier monetary easing is now waning and after peaking in May, credit growth is starting to cool. … Bank Lending & Broad Credit …
Despite the slight decline in industrial value-added growth, underlying data on output volumes suggest activity in key parts of industry continued to strengthen last month. That said, a further sharp slowdown in investment growth means that unless the …
Less rapid increases in food prices dragged down consumer price inflation last month, masking a continued pick-up in broader price pressures. Inflation is likely to edge up in the coming months, though not to a level high enough to become a major concern …
9th August 2016
Today’s trade data disappointed, with stronger manufacturing activity among many of China’s key trading partners failing to lift export growth and import growth falling on the back of the renewed drop in global commodity prices. More positively though, …
8th August 2016
Consumer price inflation is likely to have fallen in July, dragged down by a sharp drop in pork price inflation. But we expect inflation to edge up again in the coming months as severe flooding across large parts of China causes food prices to rise. … …
5th August 2016
Concerns about growing credit risks mean that the People’s Bank has good reason to hold off from another round of broad easing measures until clear signs of a renewed downturn emerge. … PBOC probably won’t cut rates or the RRR anytime …
4th August 2016
The global market panic following the step down in the renminbi fixing rate a year ago turned out to be overdone. The currency has since weakened further, but the large scale competitive devaluation that many feared has not materialised. Even so, the …
3rd August 2016
Today’s better-than-expected PMI data are consistent with our view that we should see a policy-driven pick-up in growth during the second half of this year. … PMIs …
1st August 2016
Stock markets in China have had a volatile end to the month. Meanwhile, the PBOC appears to have stepped up its foreign currency interventions in order to prevent the renminbi from weakening further. Market interest rates remain near record lows. … PBOC …
29th July 2016
The Capital Economics China Activity Proxy signals that economic growth was stable in Q2 but it does appear to been accelerating at the end of the quarter, which supports the view that a pick-up is on the cards in the second half of the year. … Stronger …
25th July 2016
Global investors pulled money out of China’s financial markets at a slightly faster pace last month, perhaps due to renewed concerns about the outlook for the renminbi. But the largest rise in foreign firms’ direct investment this year helped to keep …
22nd July 2016
Recent data from China’s labour market corroborate evidence elsewhere that the economy has slowed since the start of 2015 but that it has avoided the collapse that many had feared. Migrant wage growth continues to decelerate but remained relatively high …
20th July 2016
China’s GDP data are widely maligned. But one area where the figures are useful is in the detail they provide on the service sector. Figures for Q2 suggests that, finance apart, most sections of the service sector are in good shape. … Service sector …
18th July 2016
Credit is still expanding at a fast enough pace to provide support to the economy over the next couple of quarters. However, today's figures provided signs that the boost to credit growth from policy easing is starting to fizzle out. … Bank Lending & …
15th July 2016
While China is almost certainly expanding at a slower rate than its GDP data suggest, rapid state sector investment does appear to have kept growth broadly stable last quarter. Growth is more likely to pick up over coming months than slow further, but a …
China’s trade data for June point to further tepid growth in global demand and steady growth in imports in volume terms, helped by continued healthy growth in demand for commodities. … Trade (Jun …
13th July 2016
Consumer price inflation declined slightly last month, owing to a drop in food inflation. Looking ahead, while we expect inflation in coming months to be close to the rates seen so far this year, flooding in large parts of China has added upside risks. …
11th July 2016
Consumer price inflation is likely to have fallen in June on the back of a further decline in food price inflation. Looking ahead, while we expect inflation in the second half of 2016 to be broadly the same as in the first two quarters, ongoing flooding …
7th July 2016
The surprise increase in the value of China’s foreign exchange reserves last month could be the result of the People’s Bank marking to market the value of some reserve assets at the end of June, in the midst of the post-Brexit vote financial volatility. …
Continued declines in the renminbi against both the dollar and the official trade-weighted basket make a mockery of the PBOC’s suggestion that its policy is to keep the currency’s value stable. Another upsurge of speculative pressure on the currency is …
6th July 2016
The Q2 GDP data will provide a welcome glimpse into the performance of parts of the service sector where the regular monthly flow of data provides less visibility. But the figures should be handled with care since political pressure to meet official …
5th July 2016
Our new measure of activity in China’s industrial sector, based on data on the output of hundreds of products, points to much slower growth than the closely-watched monthly industrial production data show. Concerns over massaged growth figures aren’t …
4th July 2016
The manufacturing PMIs continue to disappoint. But given the recent resilience of the service sector and signs of strength in construction, we still aren’t overly concerned about the near-term outlook for China’s economy. … PMIs …
1st July 2016
The renminbi has weakened against the US dollar following the UK’s decision last week to leave the EU. But there are no signs of renewed panic about the currency.Meanwhile, equity markets have held steady and interest rates remain low. … China’s markets …
30th June 2016
A year after tumbling equity prices in China triggered fears about a collapse in the economy, the crisis many feared has not materialised. While more jitters are possible, a slump in growth over the months ahead remains unlikely. But slow progress in …
28th June 2016
The Capital Economics China Activity Proxy points to a pick-up in growth in May, but not the strong turnaround that policy support might have been expected to deliver by now. While growth should still strengthen over the rest of the year, the acceleration …
27th June 2016
The latest surveys of banks, companies and households in China released today suggest that business conditions and consumer confidence both improved this quarter. However, demand for loans remained weak. … The view from the ground – Q2 …
24th June 2016
The direct economic implications for China from the UK’s decision to leave the EU are small. A greater concern is that the renminbi could come under pressure to weaken against a resurgent dollar in the next few days, which could revive depreciation fears. …
Capital flows out of China have stabilised in recent months and policymakers have responded by once again easing restrictions on cross-border flows. But outflows are likely to pick up again if the dollar strengthens in the months ahead. … Capital Flows …
21st June 2016
A vote by the UK to leave the EU on Thursday is unlikely to have much impact on China. The economic and financial linkages between the UK and China are small, at least as far as China is concerned. In particular, exports to the UK are equivalent to just …
17th June 2016
Private consumption growth in Hong Kong is at the weakest since 2009, even though the labour market is tight and real wages are growing strongly. The downturn in the city’s housing market and a slump in stock prices are largely to blame. … Wealth effect …
15th June 2016
