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Inflation finally seems to be moving in the right direction, opening space for policy to be eased if necessary to support the economy. Credit quotas could be loosened before the end of the year. … Inflation in …
15th October 2011
China’s largest quarterly business survey, released today, reinforces the view that economic growth has steadied so far this year. Most firms expect conditions to worsen, though not dramatically. But real estate developers are bracing for tough conditions …
14th October 2011
Chinese officials have given little sign they are worried that the euro-zone crisis will hurt China’s economy, preferring instead to keep their focus on tackling inflation. Today’s trade figures showing one of the biggest monthly falls in exports to …
We think consumer price inflation probably rebounded a touch last month, but still expect it to drop below 5% by the end of the year. As it does, policymakers are likely to start loosening controls on credit. … Inflation Monitor …
13th October 2011
The renminbi’s rapid gains in recent days should have quashed speculation that the People’s Bank has reintroduced a dollar peg. China is likely to come under significant external pressure to keep the renminbi moving over the year ahead. In this month’s …
12th October 2011
Property developers in China are facing a grim year ahead, with a likely slump in project starts set to drag on broader economic growth. The sector should nonetheless be able to avoid a collapse thanks to support from government-mandated affordable …
7th October 2011
The final reading of China’s September manufacturing PMI was stronger than the flash estimate and adds to the evidence that conditions in manufacturing have stabilised. … HSBC/Markit Manufacturing PMI …
1st October 2011
The Capital Economics China Activity Proxy (CAP) signals that growth has stabilised over the last three months, albeit at a much slower pace than China has been used to. … Growth …
29th September 2011
While pessimism has been growing about the world economy, the last month’s data from China have actually not been that bad. But China’s economy is weaker today than on the eve of the global crisis three years ago and won’t be able to shrug off the …
23rd September 2011
Today’s flash PMI from China has done nothing to lift the spirits of global markets. On the bright side, conditions in manufacturing have at least stopped deteriorating over recent months. But chances of a significant rebound seem low. … HSBC/Markit Flash …
Households in China are expecting consumer prices to continue rising rapidly. But with businesses reporting weakening demand, falling capacity utilisation and rising inventories, that could soon change. … The view from the ground – Q3 …
16th September 2011
Neither rising wages nor growing fears about the global outlook seem to be causing any difficulties for China’s exporters. Meanwhile, the latest import data are consistent with a strong pick-up in domestic demand. … Import data point to recovery in …
13th September 2011
Inflation fell in August and is likely to end the year much lower than today. This should open the door for policymakers to relax controls on lending, particularly if export demand slows … Slower inflation and continued weakness in …
10th September 2011
Headline inflation probably declined in August. It may rebound in September but is likely to have dropped to 5% or lower by the end of the year. This would remove a significant barrier to further policy stimulus in the event of a slump in global demand. … …
7th September 2011
Policymakers in other emerging markets may be reassessing their options after a month of dire data from the major Western economies. But the government in Beijing appears confident that China can avoid the turmoil, and seems committed to maintaining the …
2nd September 2011
China’s PMIs are both signalling that conditions in manufacturing improved last month. In each case, the rebound is small. But at a time of uncertainty about the outlook we would take some reassurance from the fact that China’s PMIs have at least stopped …
The Capital Economics China Activity Proxy (CAP) signals that economic growth picked up in the last couple of months, supported by rapid growth in construction. … Signs of summer growth …
26th August 2011
The renminbi has retreated after gaining 0.6% against the dollar in two days earlier in August, damping hopes that faster movement would be sustained in the months to come. But the unusually-abrupt move has revived talk of possible currency policy reform. …
24th August 2011
Today’s flash manufacturing PMI estimate for August from HSBC/Markit suggests that the economy remains weak but that growth is at least stabilising. … HSBC/Markit Flash PMI …
China has room to stimulate demand in the event of a slump in growth and could also play a role in stabilising global markets. But there is less space for a major stimulus today than in 2008. As then, the immediate beneficiaries of any new spending would …
17th August 2011
Today’s data show that both net new lending and growth in broad money fell last month. These figures provide further support for our view that the balance of concerns in China is soon likely to shift from taming inflation to supporting growth. … Lending …
13th August 2011
Today’s trade data for July should ease fears that China’s exports are being hit by slowing global growth. Nonetheless, the increase in the trade surplus underlines the fact that China is not supporting demand elsewhere in the world. … Foreign Trade …
11th August 2011
China's consumer-price inflation remained high in July, while activity data suggest that growth was sluggish at the start of the third quarter. On the face of it, this poses a dilemma for China's policymakers. However, we continue to think that inflation …
10th August 2011
Pork prices fell in the second half of July. It is too soon to sound the all-clear. But given that consumer price inflation in everything except pork was stable over the first half of the year, this should provide reassurance that inflation dangers are …
4th August 2011
China’s investment-driven economic model is not showing signs of strain at present but growth is unlikely to be as smooth as most expect over the next few years. We have pencilled in a well-below-consensus forecast for 2013. … Is investment-driven growth …
3rd August 2011
Today’s PMIs signal that China’s manufacturing sector is still weak. Nonetheless, we continue to think that the slowdown in the overall economy has bottomed out. … PMIs …
2nd August 2011
China may be the US government’s largest foreign creditor but it has no better option than to hope for the best and try to calm any market jitters in the event of a US downgrade. … How would China react to a US …
29th July 2011
Today’s flash estimate of July’s manufacturing PMI from HSBC/Markit puts a dent in the more confident outlook resulting from last week’s better-than-expected figures on Q2 GDP. But there are a couple of reasons to believe the PMI overdoes the gloom. … …
22nd July 2011
The Capital Economics China Activity Proxy (CAP) suggest that economic growth picked up slightly at the end of Q2, after slowing from the start of the year. … Growth bottoming …
21st July 2011
The Capital Economics China Activity Proxy (CAP) suggests that economic growth picked up slightly at the end of Q2, after slowing from the start of the year. … Growth bottoming …
Pork prices continued to rise in the first half of July. But the pace at which they are rising has slowed. Pig numbers are picking up – helped in part by high prices – and the government is releasing pork reserves. The timing is uncertain but the retail …
Many of China’s smaller companies are struggling as government efforts to control inflation cause their borrowing costs to soar. The solution, as strange as it may sound, is for benchmark interest rates to be raised much higher. … How interest rate policy …
20th July 2011
China’s stronger-than-expected Q2 GDP data should reduce fears about a hard landing in the near future. But the structural trends were less encouraging: consumer spending continues to fall as a share of GDP and, with the trade surplus rebounding, growth …
14th July 2011
Last month’s lending rebound was driven by short-term credit and may have done more for asset markets than the economy. Medium and long-term lending increased by the least since 2008. … What was behind the lending …
13th July 2011
June's increase in inflation was largely caused by an acceleration in pork prices which is unlikely to last. Non-food prices did not rise at all last month, supporting the view that broad price pressures are still low. Meanwhile, weaker import growth adds …
12th July 2011
A decline in China's pig population at the turn of the year is now resulting in a surge in pork prices that probably pushed consumer price inflation above 6% y/y last month. Price pressures for non-food items have actually continued to ease, but headline …
9th July 2011
Evidence has mounted over the past month that China’s economy is slowing. In this China Watch we take a closer look at China’s leading indicators for clues about the outlook. We also preview the coming month’s data releases. Consumer price inflation data, …
8th July 2011
Today’s benchmark rate increase signals that officials still view inflation as the major near-term threat to China. There will be little direct impact on the economy and the move does not make a hard landing more likely. Nonetheless, with the economy …
7th July 2011
Most of emerging Asia should continue to grow rapidly for at least another decade, and much longer if the right policy choices are made. The key exception is China where, despite a bright long-run outlook, structural reform is needed sooner rather than …
5th July 2011
The Capital Economics China Activity Proxy (CAP) signals that the economy slowed further last month. Annual GDP growth may still be around 9% for the current quarter, but momentum has continued to slide. … Economy still …
30th June 2011
After falling for two months, Chinese equities have clawed back some of their losses in the last few days. We think that the recovery in equity prices has much further to go. … Equity markets may be turning the …
29th June 2011
Despite warm words of support from China’s leaders, there is no reason to believe that China has the ability to solve the euro-zone’s debt crisis. We estimate that China has already bought more than €40bn of euro-denominated assets this year, many in …
28th June 2011
The slowdown in Chinese manufacturing signalled by June’s flash PMI was unexpectedly sharp. But the data suggest that price pressures have also subsided. Policymakers should soon have space to loosen credit restrictions, enabling the economy to achieve a …
24th June 2011
Businesses feel that demand is slowing while household concerns about inflation have continued to ease. But households are also downbeat about income growth and this seems to be undermining any appetite they may have to spend. … The view from the ground - …
17th June 2011
China’s trade surplus looks much smaller from within the country than it does from abroad. China’s customs data put the goods surplus last year at 3% of GDP. China’s trading partners reported a collective deficit with China three times as large. Who is …
The People’s Bank of China has signalled that it remains in tightening mode by responding to the latest high inflation numbers with a reserve ratio hike. … People's Bank still in tightening …
15th June 2011
Weakening credit growth and a slowing economy present a policy dilemma when inflation is still high. Our view remains that inflation will taper off in the second half of the year and that growth will soon level out, but policy uncertainty is set to …
14th June 2011
Today’s trade data should go some way to ease fears that China’s economy is heading for a hard landing. Commodity imports remain much weaker than a few months ago but they have recovered slightly. … Foreign Trade …
11th June 2011
The gradual slowdown in economic growth should help to ease price pressures over coming months. Recent figures show that food prices continue to fall, while underlying non-food inflation appears to be stable. … Inflation Monitor …
2nd June 2011
China’s two PMIs fell in May but at a moderate pace. This is consistent with our view that the ongoing economic slowdown is gentle and unlikely to lead to a hard landing. Meanwhile, price pressures seem to be continuing to ease. … PMIs …
1st June 2011
