Filtered by Subscriptions: China Economics Use setting China Economics
Property policy recalibration The Politburo held its monthly meeting today and, as is usual in April, its focus was the economy. The gist of its statement is one we’d agree with: economic growth in the immediate rebound from zero-COVID weakness “has been …
28th April 2023
Reopening boost to services not tapped out yet The Q1 GDP figures published earlier this week exceeded even our relatively upbeat expectations, helping to settle some of the debate over the strength of China’s recovery. In response , we revised up our …
21st April 2023
Note: Join our Tuesday 18 th April online briefing discussing what China’s Q1 “data dump” tells us about the strength of the country’s reopening recovery. Register Now . The rebound has exceeded most expectations Mixed data have contributed to differences …
14th April 2023
Infrastructure boosting construction activity The shape of China’s post-zero-COVID rebound has become clearer over the past week: primarily services-driven, as expected, but with stronger construction activity too, which appears to be mostly about …
6th April 2023
Note: Join our 6th April online briefing all about the risks to EMs from banking turmoil. Register now . China and Brazil are taking steps to allow bilateral trade to be settled in renminbi rather than US dollars. The Brazilian branch of ICBC will …
31st March 2023
Official efforts to curb China’s reliance on imported semiconductors have been going on for years. In 2015, the government set a goal of China being 70% self-sufficient by 2025. But progress toward that target has been much slower than hoped. Only a third …
24th March 2023
China’s financial system has limited direct exposure to foreign banks. But recent global banking strains still pose some downside risk to the country’s economy. While there are signs that the situation is stabilising, it’s too early to rule out a wider …
17th March 2023
The National People’s Congress (NPC) is still in session. But the key outcomes are already known. Here are four takeaways. First, the economic targets and policy settings for this year were cautious and restrained . We discussed them in detail here . The …
10th March 2023
The government will lay out its economic agenda for this year at the annual session of the National People’s Congress (NPC), which kicks off on Sunday. Most of the key documents, including the government Work Report and annual Budget are published on the …
3rd March 2023
The People’s Bank last cut policy rates in August. Worries about currency weakness then stayed its hand – plus a view that supply-side disruption linked to COVID would render further easing ineffective. Those concerns have since gone away. We had thought …
24th February 2023
Buyer sentiment seems to be improving New home sales have taken a beating since their peak in early 2021. But there are some green shoots in the recent data which show sales in large cities rising at the start of this year. (See Chart 1.) We think this …
17th February 2023
Worse still to come for exporters China’s exports boomed throughout much of the pandemic with global consumers, stuck at home and flush with cash from fiscal transfers, spending more on Chinese-made goods. But the unwinding of those pandemic …
10th February 2023
2023 fiscal boost still on its way December’s Central Economic Work Conference called for stepped-up fiscal support this year. On-budget borrowing, a timely proxy for fiscal policy, has since picked up slightly. But officials still have work to do. Net …
3rd February 2023
Policy shifts pave the way for a cyclical recovery New home sales ended 2022 46% below their spring 2021 peak. But this could mark the bottom for China’s housing market. Daily data suggest that sales have rebounded strongly in recent weeks – they are …
27th January 2023
A partial recovery in Lunar New Year travel The world’s largest annual migration of people is well underway, with millions of Chinese returning to their hometowns to spend the upcoming Lunar New Year holiday with their families. This migration, which …
20th January 2023
Tuesday’s retail sales data are likely to show that spending plunged as COVID crashed through China last month. But December was an age ago. It can’t tell us much about what will happen now. We’d caution against some of the bullish takes doing the rounds. …
13th January 2023
COVID-19 has torn through China’s population with remarkable speed. Medical experts estimate that over 70% of the population in major cities such as Shanghai have been infected since mid-November. Anecdotal evidence suggests that the human cost among the …
6th January 2023
The next couple of weeks will be crucial in China’s battle with COVID. It is possible, given reports of how widespread infections currently are, that the outbreak in Beijing is close to a peak (the official infection data are no longer reliable, so we …
23rd December 2022
CEWC points to further policy support The Central Economic Work Conference (CEWC) ended today with a readout in state media promising further policy support for consumers and property developers in particular. China will “expand domestic demand” and …
16th December 2022
Fiscal policy coming back to life Fiscal policy has not played much of a role supporting the economy this year. A large part of the blame lies in an inflexible budget process that makes it hard for the finance ministry to depart from limits set in …
9th December 2022
Economy set for Q4 contraction due to virus hit The November PMI readings published this week underscored the economic cost of efforts to contain the current outbreak. The official services index fell to its lowest level since the height of the Omicron …
2nd December 2022
Warmer words in US-China relations There has been a palpable easing of strains between China and the West since the cordial meeting last week between Xi and Biden . Xi agreed to restart the high-level talks that China halted when Nancy Pelosi visited …
25th November 2022
Virus disruption has continued to intensify over the past week even after measures to optimise the COVID response were released. Implementation has been haphazard so far. Local officials have struggled to strike a balance between minimising disruption and …
18th November 2022
Virus disruption has intensified recently, with COVID infections hitting a six-month high. The Politburo Standing Committee (PBSC, China’s highest leadership body), met yesterday to discuss the situation. According to the meeting readout, they agreed to …
11th November 2022
Chinese equities turned a corner earlier in the week on the back of rumours of plans to shift away from the zero-COVID policy by next March. Remarks reportedly made at a conference by Zeng Guang, the former chief scientist at China’s CDC, added fuel to …
4th November 2022
The Q3 GDP figures published earlier this week came in slightly stronger than expected. We don’t think the data should be taken completely at face value – our in-house alternative, the China Activity Proxy, paints a more downbeat picture . But the …
28th October 2022
The Party Congress has slowed the leadership’s response to the semiconductor export controls introduced by the Biden administration two weeks ago. But the Ministry of Industry and Information Technology has, according to Bloomberg, been conducting …
21st October 2022
The Party Congress begins on Sunday. We covered much of the agenda and economic implications in a Focus piece and at a Drop-In event (recording here ) this week. One element of both was a discussion of who might replace Li Keqiang as premier. But Li …
14th October 2022
Our annual Spotlight series this year looks at the implications of the “fracturing” of the global economy that we believe is being caused by the re-emergence of geopolitics as a driver of policy. The key divide is between China and the West. Events at the …
7th October 2022
Mortgage rate floor relaxed, LPR cuts now less likely After being slashed this year, mortgage rates in most cities are now at the regulatory floor which, for first-time buyers, is currently set at 20 basis points below the five-year loan prime rate …
30th September 2022
Some progress in restarting stalled projects Back in July, homeowners banded together en masse and refused to repay mortgages on presold homes in projects where construction had stalled. This sent shockwaves through the housing market, further …
23rd September 2022
PBOC trying to loosen without triggering renminbi The onshore renminbi weakened past 7/$ for the first time in two years today. Recent currency weakness has clearly put the PBOC on edge. It has been pushing back via the daily fixing. The exchange rate …
16th September 2022
Frozen in the headlights Early indicators suggest that China’s economy was even weaker in August than it was in July, when the rebound from the Shanghai lockdown prematurely fizzled out. And constraints faced by policymakers – some they have little …
9th September 2022
COVID-19 rears its head again Virus cases have fallen back over the past few weeks as the large outbreak on Hainan island has come under control. But that masks a rapidly deteriorating situation nationwide, with 44 cities now undergoing outbreaks, …
2nd September 2022
Lots of talk, not much action There has been a raft of policy announcements during the past week. Last Friday, officials unveiled a scheme to channel financing to developers. On Monday, the Loan Prime Rates were lowered. And on Wednesday, the State …
26th August 2022
Hit to hydro putting pressure on coal supplies Southwest China is currently experiencing power shortages due to a severe drought and heatwave. Officials in Sichuan province and Chongqing municipality have responded by ordering week-long halts to factory …
19th August 2022
PBOC inflation concerns add to policy constraints The People’s Bank (PBOC) published its quarterly monetary policy report on Wednesday. It struck a less relaxed tone on inflation. While the PBOC still expects only a modest rise in CPI this year, in line …
12th August 2022
Taiwan has dominated the headlines this week, with Nancy Pelosi’s visit triggering Chinese military drills and restrictions on cross-strait trade. These moves appear largely symbolic. China’s bans on exports of natural sand and imports of some Taiwanese …
5th August 2022
GDP target RIP It turns out that GDP growth targets aren’t such a big deal after all. The Politburo yesterday said that only “provinces that are in a position to do so” need hit their targets this year. And it signalled that no major new stimulus measures …
29th July 2022
Developers likely to remain under pressure Last week, we discussed the threat to the housing market from the growing number of home-buyers halting their mortgage payments on uncompleted properties. Those boycotts have expanded and now affect at least 319 …
22nd July 2022
Mortgage boycotts bode ill for housing market Homebuyers across China are banding together to pause mortgage payments in response to construction delays on presold apartments. These mortgage boycotts have spread rapidly in the past week, affecting over …
15th July 2022
Late last month, Xi Jinping reaffirmed the goal of achieving “around 5.5%” GDP growth for the year. The economy grew 4.8% y/y on the official figures in Q1 so faster growth is needed, on average, over the rest of the year. But it is almost certain that …
8th July 2022
PBOC survey reveals looser lending controls Although changes to interest rates and reserve requirements attract more attention, the main determinants of the pace of bank lending in China are quantitative controls such as loan quotas and window guidance. …
1st July 2022
Getting back to normal China’s economy began to rebound in May as lockdowns were gradually lifted. But many consumers stayed home and activity remained depressed, especially in the service sector. There has been a more substantial improvement in mobility …
24th June 2022
Unattainable even on paper China’s statistics office is adept at massaging GDP data. But it can’t perform surgery. In April and May combined, retail sales fell 8.9% y/y and industrial output and real exports both fell 1.1%. Even if growth returned in June …
17th June 2022
Less tech, more regulation The Ant IPO is back on, according to Bloomberg and Reuters. If confirmed, what would this signal about the regulatory crackdown? An IPO would be positive as a sign that tech firms and the regulators have found a way to get …
10th June 2022
Accelerating towards a fiscal cliff Last week’s announcement of 33 support measures in six areas by the State Council has been followed by a flurry of statements by ministries signalling that they understand the urgency of the situation. A State Council …
2nd June 2022
Inventories at record high relative to sales Most observers assumed that China’s Omicron wave would worsen goods shortages both at home and abroad but the data increasingly point to the opposite outcome, at least at the macro level. The latest evidence …
27th May 2022
Three lessons from past outbreaks With the Omicron outbreak subsiding and policy support being ramped up, how quickly can the economy get back on its feet? Previous virus waves offers some clues. Table 1 summarizes how long it took key indicators to go …
20th May 2022
Shanghai officials today said they hoped to eradicate community transmission by next Friday. In Beijing, case numbers remain stable. Smaller outbreaks elsewhere have receded, with the result that there has been a sharp drop in the share of economic …
13th May 2022