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This page was first published on Friday 30th June, covering the official PMIs. We added commentary on the Caixin manufacturing PMI on Monday 3rd July, and Caixin services and composite PMI on Wednesday 5th July. Growth now below pre-pandemic levels This …
30th June 2023
This page has been updated with additional analysis and charts since first publication. Recovery still making headway The PMI surveys suggest that China’s economic recovery was still ongoing in May. Waning fiscal support weighed on construction activity. …
31st May 2023
Inflation set to remain below government’s ceiling this year Producer price deflation deepened further last month to a 33-month low, and consumer price inflation dropped below 1% for the first time in over a year. The key driver was lower food and fuel …
11th April 2023
Note: Join our 6 th April online briefing all about the risks to EMs from banking turmoil. Register now . Reopening boost to industrial activity already waning The Caixin manufacturing index was more downbeat than its official counterpart, especially when …
3rd April 2023
Note: Join our 6 th April online briefing all about the risks to EMs from banking turmoil. Register now . Still going strong The official PMIs suggest that China’s rapid reopening recovery remained robust this month. The weak global backdrop weighed on …
31st March 2023
A stronger start to 2023 Activity data for the first two months were broadly as expected, showing a jump in consumer spending coupled with modest gains in investment and industrial output. High-frequency data suggest that this recovery has continued in …
15th March 2023
Credit growth benefiting from reopening boost Bank loan growth jumped to a 14-month high in February. And broad credit growth accelerated for the first time since September. This rebound should continue in the near-term thanks to a reopening revival in …
10th March 2023
Drop in inflation suggests reopening effects remain small Factory gate prices stopped falling last month, as China’s reopening helped to put a floor under global commodity prices. Meanwhile, consumer price inflation dropped back sharply due to a fall in …
9th March 2023
No reopening boost to imports yet China’s import volumes were little changed at the beginning of the year, disappointing hopes for a rebound. But we still think that reopening will eventually drive a pick-up in imports. And while exports fared better than …
7th March 2023
A very rapid recovery The latest survey data are exceptionally strong across the board, consistent with our expectation for a rapid near-term rebound. We expect this recovery to lose momentum later in the year but the risks to our forecasts look …
1st March 2023
Credit growth is bottoming out After slowing last year, bank loan growth jumped to a 10-month high in January. After accounting for seasonal effects, broad credit growth looks to have ticked up too. We expect the recovery to continue in the near-term as …
10th February 2023
Inflation ticking up on reopening effects Factory-gate prices continued to decline last month thanks to falling commodity prices and waning supply chain disruption. But at the same time, a jump in demand for travel and other services following the removal …
Return of tourists will help drive the city’s recovery Hong Kong’s GDP was unchanged in q/q terms last quarter. This was largely due to a further decline in exports but the worst may be over on that front given that global growth is probably close to a …
1st February 2023
Industrial activity steady as services rebound The Caixin manufacturing PMI published today edged up slightly in January as disruption from the reopening wave eased but it remained at a subdued level. Taken together with the official survey published …
Reopening kick starts a rapid recovery The official PMIs add to evidence of a rapid rebound in economic activity this month as disruption from the reopening wave faded. More shoppers returned to the street boosting services activity while easing labour …
31st January 2023
A smaller-than-expected hit from reopening China’s statistics bureau claims that GDP was unchanged q/q in Q4. That is implausible, even accounting for December data showing surprising economic resilience in the face of the reopening wave of infections. …
17th January 2023
Reopening to boost imports but exports will still struggle China’s exports contracted year-on-year in December by the most since the Wuhan lockdown in early 2020. Imports held up slightly better but are still depressed. Inbound shipments should start to …
13th January 2023
Some very modest reopening effects Consumer price inflation ticked up in December, while producer price deflation eased. There are some early signs that the transition toward living with COVID is starting to put upward pressure on prices. But the uptick …
12th January 2023
Getting worse in December but soon likely to be getting better The downturn in credit growth extended in December amid the economic disruption from reopening. But the worst of the disruption may have already passed. The shift toward living with COVID and …
10th January 2023
Headwinds from reopening continue into 2023 The latest surveys suggest that the reopening wave delivered another blow to the economy in December. Services activity looks to have slumped. Industry was not spared, although the hit appears more modest. But a …
3rd January 2023
The downturn has deepened and reopening won’t reverse it overnight The disruption from virus outbreaks intensified in November, with retail sales, investment spending and industrial output all contracting by the most month-on-month since the Shanghai …
15th December 2022
Little appetite for borrowing Credit growth has now reversed all of its modest acceleration over the past year, a clear sign that monetary easing has failed to gain traction due to virus disruption and waning confidence among households and firms. …
12th December 2022
Inflation likely to remain subdued even amid reopening Consumer price inflation dropped to its lowest in eight months in November and producer price inflation stayed at a 23-month low. The shift away from zero-COVID could put some upward pressure on …
9th December 2022
Exports to shrink further as global recession looms Chinese exports contracted year-on-year in November by the most since the start of the pandemic and imports dropped at the fastest pace in 30 months. We expect outbound shipments to fall further over the …
7th December 2022
More signs of weakness in industry The Caixin manufacturing PMI edged up in November but remained weak. Taken together with the official survey published yesterday, they suggest that downward pressure on industrial activity intensified last month. The …
1st December 2022
COVID disruptions deliver a further hit to activity The official PMIs add further evidence of another large blow to services activity as virus disruptions intensified this month. The hit to industry looks to have been more modest. But downside risks …
30th November 2022
Economy to continue struggling The October data point to a further loss of momentum, with retail sales dropping sharply amid worsening virus outbreaks. November is shaping up to be even worse. With exports cooling, the property sector still in the …
15th November 2022
Households stop borrowing outright as leadership recommits to zero-COVID Much weaker than expected credit growth – and an extremely unusual outright fall in lending to households – again underlines the difficulties policymakers are facing stimulating …
10th November 2022
Factory-gate deflation setting in Consumer price inflation eased last month from September’s 29-month high and remained below the government’s preferred ceiling of 3%. It is set to stay low by global standards over the coming quarters. Meanwhile, producer …
9th November 2022
Exports set to fall further as outlook darkens China’s export volumes dropped back sharply in October, due to a deterioration in global economic conditions and a reversal in pandemic-related demand. We expect exports to weaken further over the coming …
7th November 2022
Better than expected but still consistent with a slowdown The Caixin manufacturing PMI rose in October but remained weak. Taken together with the official survey published yesterday, it points to a slowdown in industrial activity last month. We think the …
1st November 2022
Weak exports will continue to hold back the city’s recovery Hong Kong’s economy contracted last quarter due to a sharp decline in exports. While the ongoing easing of virus-related restrictions should continue to support a recovery in retail spending, …
31st October 2022
COVID disruptions and global downturn hit activity The official PMIs point to a further loss of momentum this month as virus disruptions worsened and export orders remained under pressure. With the zero-COVID policy here to stay, we think the economy will …
Omicron hit reversed but momentum still weak Growth ticked up in Q3 as the hit from the Omicron wave reversed. But this leaves output only slightly higher than where it started the year. And momentum is now weakening again. GDP growth picked up from 0.4% …
24th October 2022
Core inflation continues to ease Consumer price inflation rose to a 29-month high in September and is now scraping up against the government’s preferred ceiling of 3%. But this was due to a rise in food inflation that is likely to prove temporary. With …
14th October 2022
Policy support starts to gain traction Credit growth surprised to the upside last month, edging up thanks to official efforts to boost lending via policy banks. But wider appetite for borrowing still appears depressed, which will probably keep credit …
12th October 2022
No sign of FX sales, but PBOC pushing back in other ways The decline in China’s foreign exchange reserves appears to be due to valuation effects rather than direct intervention in the FX market. But we still think the PBOC will try, and may well succeed, …
7th October 2022
Industry and services both take a hit The surveys suggest that China’s economy continued to lose momentum in September, with the global downturn weighing on exports and virus disruptions dealing a fresh blow to services activity. While the latter should …
30th September 2022
Economy to stay weak amid zero-COVID and property woes China’s economy held up slightly better than anticipated last month, but momentum still weakened relative to July amid renewed virus disruptions and factory closures due to power shortages. September …
16th September 2022
Credit growth depressed and likely to remain so There was a further deceleration in credit growth last month, with a new wave of lockdowns adding to the problems in the housing market that have been hitting credit demand. Credit growth will continue to …
9th September 2022
Inflation set to remain below government’s ceiling this year Consumer price inflation fell in August and remains below the PBOC’s preferred ceiling of 3%, leaving room for the Bank to ease policy further. Meanwhile, producer price inflation declined to …
More suggestions of PBOC intervention A sizeable fall in the value of China’s foreign exchange reserves in August may be further evidence of the PBOC pushing back against the slide in the renminbi. If the currency were to breach 7 to the dollar, this …
7th September 2022
Exports weaker than expected China’s export volumes fell last month by the most since March. Partly, this was due to the backlog of orders that built up during Shanghai’s lockdown having been cleared and ports returning to normal operations. But there was …
More signs that growth has stalled The larger-than-expected drop in Caixin manufacturing PMI was more significant than the slight rise in the official PMI, suggesting that downward pressure on industry intensified last month . There is more pain on the …
1st September 2022
Recovery continues to lose steam The official PMIs show a further loss in economic momentum this month as the reopening boost waned and the property downturn deepened. We continue to think the economy will struggle to make much headway during the coming …
31st August 2022
Recovery stalls on weakened property sector The July data suggest that the post-lockdown recovery lost steam as the one-off boost from reopening fizzled out and mortgage boycotts triggered a renewed deterioration in the property sector. We think the …
15th August 2022
Credit growth held back by mortgage boycotts Credit growth dropped back last month, with property market jitters weighing on bank lending. It may continue to disappoint in the near-term given that sentiment among homebuyers is likely to stay weak and …
12th August 2022
Underlying inflation is still low Consumer price inflation rose to a 24-month high in July and is now nearing the government’s target of 3%. But that is still very low by global standards, and we think headline inflation is close to a peak and will drop …
10th August 2022
Exports still strong but headwinds mounting Exports held up well last month, thanks to a backlog of orders still being cleared. But it won’t be long before shipments drop back on cooling foreign demand. Meanwhile, imports continued to trend down, pointing …
8th August 2022
Economic recovery to remain tepid Hong Kong’s GDP ticked up last quarter as the easing of virus restrictions boosted consumption. But the recovery was muted, held back by a drop in exports. We think growth will remain weak given rising interest rates, …
1st August 2022
