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Despite repeated talk about the need to rebalance China’s economy over the past decade and a half, there has so far been little meaningful reduction in its dependence on investment and on exports. In fact, repeated efforts to shore up short-run growth …
22nd January 2024
GDP breakdown points to rebound in tech & retail Officially, GDP growth slowed last quarter in q/q terms. But as we noted in our response to the data, this does not seem consistent with wider evidence of a slight improvement in momentum recently. On …
19th January 2024
We project decent near-term gains in China’s equities, think long-dated CGB yields will finish the year around their current levels, and expect the renminbi to rally against the US dollar. China’s equity, bond, and FX markets were on the back foot …
This page has been updated with additional analysis and charts since first publication . Recovery still shaky China’s economy lost momentum in Q4 according to the official GDP figures. But we suspect that’s because they failed to acknowledge the full …
17th January 2024
This page has been updated with additional analysis since first publication . The PBOC fails to deliver Despite a cut being widely expected, the MLF was again kept unchanged today – for a fifth straight month. The main factor holding the PBOC back was …
15th January 2024
Growth pick-up to extend into Q1, fade by year-end The Q4 GDP data due on Wednesday are likely to show that China’s economy ended 2023 on a more positive note. Our GDP tracker points to y/y growth of 5.5%, up from 4.9% in Q3. That partly reflects a weaker …
12th January 2024
This page has been updated with additional analysis since first publication . Broad credit growth hits 7-month high, but bank lending still weak The rebound in broad credit growth remained on track thanks to a step up in government borrowing. But growth …
This page has been updated with additional analysis since first publication . Export volumes still due for a pullback China’s export values rose y/y at the fastest rate since April. And while export volumes only ticked up slightly, they remain near a …
This page has been updated with additional analysis and charts since first publication. Deflation set to ease gradually Smaller y/y declines in food and energy prices meant that both CPI and PPI deflation eased last month, a trend that we think will …
Note: W e held a client briefing straight after the election weekend to discuss what the vote means for Taiwan and the global economy. View the on-demand recording here . China may respond to a victory for Tsai Ing-wen’s chosen successor in Saturday’s …
10th January 2024
PSL injection to provide modest lending boost While bond yields in developed economies have regained some ground this week, the opposite has been the case in China, with the 10Y CGB yield dropping to a near four-year low of 2.52% today. This suggests …
5th January 2024
While equities in China might make up some lost ground over the next few months relative to those in India, we suspect they’ll underperform over the longer term. In the fifteen years or so that preceded the COVID-19 pandemic, equities in China and India …
4th January 2024
This report was first published on Tuesday 2 nd January, covering the official PMIs and Caixin manufacturing PMI. We added commentary on the Caixin services and composite PMIs on Thursday 4 th January. Rebound led by services and construction The official …
2nd January 2024
China’s economy has regained some strength recently. We expect this to continue into 2024, on the back of support from fiscal policy and a further pick-up in household spending. But with property construction likely to continue to decline and exports set …
28th December 2023
PBOC moving cautiously to ease further The Loan Prime Rates (LPR) were left unchanged for a fourth consecutive month on Wednesday. But today’s coordinated reductions in commercial bank deposit rates suggest that the PBOC is still on an easing path. Lower …
22nd December 2023
Our China Activity Proxy (CAP) suggests that the economic recovery is continuing as the service sector makes up further lost ground. With policy support still flowing and consumers feeling less downbeat, further gains are likely in the near-term, but …
20th December 2023
This page has been updated with additional analysis and charts since first publication. Recovery still underway The main bright spot was a healthy pick-up in industrial output thanks to the strength in exports. Retail sales and fixed investment remained …
15th December 2023
Weak sentiment isn’t the main headwind China’s leadership gathered earlier this week for the Central Economic Work Conference (CEWC), which is held every December to discuss the economic targets and policy settings for the following year. The …
This page has been updated with additional analysis since first publication . A smaller-than-expected acceleration Broad credit growth continued to rise in November thanks to a pick-up in government bond issuance, but it still came in below expectations. …
13th December 2023
This page has been updated with additional analysis since first publication . Decline in services inflation a concern CPI fell deeper into deflationary territory last month. The main culprit continues to be food and energy prices – the rate of core …
11th December 2023
Faith in the state backstop as strong as ever Earlier this week, Moody’s downgraded the outlook on China’s sovereign credit rating from “stable” to “negative” and made similar changes to its ratings outlook for Chinese banks, local governments and …
8th December 2023
This page has been updated with additional analysis since first publication . Export volumes reach new high China’s export values rose year-on-year for the first time since May while the level of export volumes hit a fresh high, supported by exporters …
7th December 2023
Overview – China’s economy has regained some strength recently. We expect this to continue into 2024, on the back of support from fiscal policy and a further pick-up in household spending. But with property construction likely to continue to decline and …
6th December 2023
Ramp up in fiscal support yet to be fully felt Government borrowing has been strong ever since the Politburo called for an acceleration in bond issuance at its July meeting. Momentum has been sustained by a rare mid-year increase in the deficit target …
1st December 2023
In this Global Economics Update , we describe eight of the biggest risks to our economic forecasts for 2024. The unusual nature of this cycle and uncertainties surrounding the transmission of monetary policy mean that the biggest risks relate to central …
30th November 2023
This page was first published on Thursday 30 th November, covering the official PMIs. We added commentary on the Caixin manufacturing PMI on Friday 1 st December , and the Caixin services and composite PMI on Tuesday 5 th December. Reality may not be as …
In much of the world, interest rates are likely to settle at higher levels than was the case prior to the pandemic. But China is a key exception, with its shrinking population, slowing productivity gains, low inflation rate and increasingly-heavy debt …
29th November 2023
China’s economy is making headway again after stalling during the summer. A step up in policy support looks set to deliver a modest cyclical recovery but trend growth remains under pressure. … China Chart Pack (Nov. …
28th November 2023
More credit support for developers in the works Policymakers have been trying, and largely failing, to stabilise the property sector for some time. There was a major step-up in support in September, when downpayment requirements and purchase controls …
24th November 2023
Our China Activity Proxy (CAP) shows that the economy was still making headway last month, though it appears to have lost some steam. Downside risks continue to linger, particularly in the property sector. But we think policy support will keep the …
20th November 2023
Developers retreating, LGFVs taking their place In remarks published by state media last weekend, China’s housing minister, Ni Hong, discussed plans to alter the country’s real estate development model, shifting the focus from quantity to quality. There …
17th November 2023
During the past decade, the global economy has transitioned out of an era in which globalisation was the key driver of economic and financial relationships into one shaped by geopolitics. Previously, most governments had believed that closer economic …
16th November 2023
This page has been updated with additional analysis and charts since first publication. Note: Join our Drop-In briefing on Thursday 16th November on the Xi-Biden meeting, the fracturing of the global economy, and what this means for Saudi Arabian …
15th November 2023
Resilience of export volumes unlikely to last China’s exporters are doing better than the headlines suggest. Most analysis focuses on what is happening in y/y terms to export values – they have been contracting for six months. Less widely understood is …
10th November 2023
This page has been updated with additional charts and analysis since the first publication. Deflationary returns but is unlikely to persist CPI slipped back into deflationary territory last month. This was mostly due to a drop in food inflation. But core …
9th November 2023
This page has been updated with additional analysis since first publication . Import volumes surpass 2021 peak The year-on-year contraction in export values deepened last month. But this was mainly due to lower export prices. Export volumes were little …
7th November 2023
Over half of cross-border settlement now in RMB Earlier this week, the People’s Bank published its annual report on renminbi internationalisation. The message from the 84-page document is that global use of China’s currency has been gaining momentum …
3rd November 2023
China’s leadership has outlined its wish list for financial sector development. It wants stricter oversight of financial institutions to ensure they serve the interests of the Party and country. This includes providing greater credit support to …
1st November 2023
This page has been updated with additional analysis and charts since first publication. Economy narrowly avoids another contraction Hong Kong’s economy largely treaded water in Q3, underperforming most expectations. A jump in investment and a pick-up in …
31st October 2023
This page was first published on Tuesday 31 st October, covering the official PMIs. We added commentary on the Caixin manufacturing PMI on Wednesday 1 st November, and the Caixin services and composite PMI on Friday 3 rd November. Note: We discussed h …
China’s economy is regaining some momentum after stalling during the summer. A step up in policy support looks set to deliver a modest cyclical recovery but trend growth remains under pressure. … China Chart Pack (Oct. …
30th October 2023
Foreign direct investment into China, as measured by the balance of payments data, has collapsed. It is tempting to pin this on global fragmentation or a loss of confidence in China’s economic prospects. But the key driver appears to be more prosaic: the …
Giving with one hand, taking with the other Earlier this week, China’s legislature increased the government’s planned annual budget deficit from 3.0% of GDP to 3.8%. This was the first mid-year revision since 2008 and only the fifth in the PRC’s history. …
27th October 2023
Our China Activity Proxy (CAP) suggests that growth slowed in Q3. But the economy was regaining momentum at the end of the quarter, led by gains in the service sector. With stimulus still flowing, this recovery should continue over the coming quarters. …
25th October 2023
The additional fiscal support approved today is the intervention we had been expecting and that was needed to prevent an abrupt fiscal tightening in China in the closing weeks of the year. Fiscal policy has been a prop to growth in China over the last few …
24th October 2023
Q3 acceleration may be statistical mirage The GDP figures published earlier this week were stronger than most had expected . They showed that growth accelerated from 0.5% q/q in Q2 to 1.3% in Q3, an annualised rate of 5.3%. But the official q/q …
20th October 2023
We think both the recent outperformance of China’s sovereign bonds relative to those in the US and the underperformance of its equities will end – and may even reverse somewhat – in the near future. Chinese government bonds (CGBs) have largely been spared …
This page has been updated with additional analysis and charts since first publication . According to official GDP, growth more than doubled in q/q terms between Q2 and Q3, reaching a healthy 5.3% annualised rate. Our China Activity Proxy suggests that …
18th October 2023
This is an excerpt from our CE Spotlight series on AI. The whole series can be viewed here . A year ago, China was widely held to be a – perhaps the – global leader in AI. It has an online population larger than the US and Europe combined. Ubiquitous …
17th October 2023
Online briefing about the health of China's economy We'll be online on Wednesday shortly after the release of the September activity and spending data and Q3 GDP. Register here to join us. US export controls about to bite harder The US government is on …
13th October 2023
