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More travel but consumers still holding back Domestic tourists made 230 million trips over the five-day Labour Day holiday which concluded on Wednesday, beating the pre-pandemic record of 195 million trips in 2019. One caveat, however, is that the holiday …
7th May 2021
Not falling, as far as we know The statistics bureau issued a terse statement on Thursday that “According to our understanding, China’s population continued to grow in 2020.” This rather diffident rebuttal of Tuesday’s FT story only increases anticipation …
30th April 2021
A window onto the service sector The detailed sectoral GDP data for Q1 were published over the weekend. The breakdown of services activity is particularly useful as it provides a view over parts of the economy that aren’t captured by high-frequency macro …
23rd April 2021
Default risk spreads to financial bonds Bonds issued by Huarong Asset Management, China’s largest distressed debt manager, have seen their price plunge recently after the firm delayed the publication of its 2020 results, reportedly due to significant …
16th April 2021
PBOC moves to slow credit growth The readout from the latest PBOC Monetary Policy Committee meeting struck a dovish tone. In particular, a pledge to lower real lending rates means readers could be forgiven for thinking that the central bank is still in …
9th April 2021
Consumer boycotts of foreign brands in China are nothing new but they have become more frequent . A dataset produced last year by the Australian Strategic Policy Institute (ASPI) identified 57 acts of what it calls “coercive diplomacy” in 2019, more than …
1st April 2021
PBOC may stop short of formalizing tighter policy We had expected the PBOC to start hiking its policy rates this quarter given the strong economic backdrop. By the end of last year, output had rebounded well above trend and while headline y/y inflation …
26th March 2021
Decoupling is Made in China too The acrimonious meeting in Alaska underlines that a new US administration has not led to a reset of US-China relations. China’s government had apparently hoped that some Trump-era sanctions might be rolled back as a …
19th March 2021
The National People’s Congress ended yesterday. From an economic perspective, the key outcomes were the budget and policy targets for 2021 which we discussed here and the Five-Year Plan, which we’ll publish a Focus on shortly. (We’re also holding a …
12th March 2021
The National People’s Congress will convene today and reveal the government targets and priorities for 2021, along with the annual budget and 14 th Five-Year Plan. We will publish an Update with our initial analysis once the key details have been made …
5th March 2021
The National People’s Congress that starts on Friday is the stage on which the government sets out its economic plans. There are a few things to focus on. Withdrawal of fiscal support The budget presentation (also on Friday) is likely to confirm that the …
26th February 2021
Spring Festival spending subdued During the last sexagenary cycle of China’s lunisolar calendar, Years of the Ox were by some way the weakest for GDP. (See Chart 1.) 2021 will be different. The suppression of output during last year’s lockdown means that …
19th February 2021
China has again shown its prowess in extinguishing COVID-19 flare-ups: infections were reported in 24 of China’s 31 provinces in January; no new cases of domestic transmission were found anywhere in China this week. The vaccination programme is looking …
11th February 2021
Ant’s days as a freewheeling tech firm are over After years of presenting itself as a tech firm and benefitting from limited oversight, fintech giant Ant Group has reportedly agreed to restructure as a financial holding company (FHC). As a result, it will …
5th February 2021
Lunar New Year travel kicks off with a whimper Yesterday was the first day of what the government calls the “Spring Festival travel season”, which lasts 40 days. During this period, the Ministry of Transport (MoT) publishes daily data on long-distance …
29th January 2021
Anti-trust guidelines target Ant and Tencent The PBOC issued draft guidelines on Wednesday that set explicit market share ceilings for non-bank payment providers, offering greater clarity about what the government’s anti-trust push against China’s tech …
22nd January 2021
Virus flare-up to dampen holiday travel China reported 210 new COVID-19 cases today (66 of them asymptomatic), the highest daily tally since March. The virus flare-up began in Hebei province but has spread more widely than previous localised outbreaks. A …
15th January 2021
COVID-19 battle not over but vaccines offer hope Shijiazhuang, a city of 11 million and the capital of Hebei, was put into lockdown on Thursday, after recording 117 new coronavirus cases the previous day (67 of them asymptomatic). Mass testing is being …
8th January 2021
Politburo tea leaves ahead of the CEWC We’re still awaiting news out of the Central Economic Work Conference (CEWC), which sets the economic targets and policy priorities for the coming year. (See here for what to expect.) We did, however, get some hints …
18th December 2020
CEWC to discuss withdrawal of COVID stimulus China’s leadership will gather in the coming days for the Central Economic Work Conference (CEWC), an annual meeting that sets the economic targets and policy priorities for the coming year. The discussions are …
11th December 2020
US to curtail China’s access to its capital markets On Wednesday, the US House of Representatives passed the “Holding Foreign Companies Accountable Act”, which has already cleared the Senate. If it is signed into law by President Trump, as seems likely, …
4th December 2020
Lockdown boost to exports will fade… The growing likelihood that effective vaccines will soon be available in major developed economies has brightened the global economic outlook. But an end to lockdowns and a revival of spending on services in major …
27th November 2020
Economic strength opens the door to more defaults China’s credit market had been quiet for much of this year. Following a couple of large bond defaults in the early days of the COVID-19 outbreak, the authorities quickly stepped up support for struggling …
20th November 2020
Would a vaccine help China’s economy? China is a rare example of an economy that would be worse off initially if effective COVID-19 vaccines were rolled out globally. The diversion of household spending in major economies from services to goods has served …
13th November 2020
Ant IPO a reminder that Party control comes first The Ant IPO, which was set to be the world largest, was abruptly suspended on Tuesday, just two days before it was due to go ahead. The suspension was pinned on a change in the regulatory environment, …
6th November 2020
Officials remain tight-lipped on policy specifics The Fifth Plenum, held in Beijing to discuss the government’s 14 th Five-Year Plan (FYP) and long-run goals, concluded yesterday. The post-meeting communique mostly just confirmed the broad outlines that …
30th October 2020
Inward shift is rational but will come at a cost China’s leadership will gather in Beijing next week to discuss the 14 th Five-Year Plan. The meeting will take place behind closed doors and the full plan won’t be made public until next March. But China’s …
23rd October 2020
West’s virus woes need not deal a major blow China’s goods exports have been strong despite the weakness of the global economy. Data published on Tuesday showed they rose 9.9% y/y last month, with the strength concentrated in shipments of consumer goods …
16th October 2020
Spending recovered further during Golden Week Tourist activity and spending during the nine-day “Golden Week” holiday that ended yesterday was substantially stronger than during holidays earlier in the year, but still depressed. That might point to …
9th October 2020
Golden Week to spur consumption growth China’s “Golden Week”, a nine-day holiday that combines both National Day and the Mid-Autumn Festival, kicked off yesterday. It could provide a much-needed boost to consumption, which has lagged the recovery in …
2nd October 2020
Foreign demand for CGBs is growing FTSE Russell yesterday announced that it will include China in its World Government Bond Index (WGBI). This is an important milestone and means onshore Chinese Government Bonds (CGBs) are now included in all major bond …
25th September 2020
China’s economy is largely back to normal It’s now a consensus view that China’s near-term economic prospects are bright, especially relative to elsewhere. But even amid upbeat expectations, the August activity and spending data published this week still …
18th September 2020
China’s surplus is huge in global terms One extraordinary development of 2020 has been the impact of the biggest global economic slump in memory on the world’s biggest exporter. When much of the world went into lockdown, demand for masks, medical …
11th September 2020
Regulatory headwinds in property are intensifying China’s property sector rebounded rapidly from the COVID-19 downturn. In fact, sales and new property starts are now growing faster than they were at the end of last year. (See Chart 1.) And property …
4th September 2020
Low oil prices are boosting corporate profits… Chinese firms are benefiting from a favourable combination of strong demand at home but weak global demand for energy and low oil prices. Data published yesterday showed that profit growth among industrial …
28th August 2020
Banks hit with co-pay on stimulus bill When the Global Financial Crisis struck, Chinese policymakers leant heavily on the state-owned banks to shore up economic activity. While the 2009 RMB4trn fiscal stimulus package receives much of the credit, the …
21st August 2020
Demand for trucks rising at fastest pace since 2010 Data published this week showed that vehicle sales expanded 16.4% y/y in July, the fastest pace in over three years. Most of the focus has been on the strength of passenger car sales, which is …
14th August 2020
A marriage of convenience heading for divorce US and Chinese officials will conduct a semi-annual review of the implementation of the Phase One trade deal at the end of next week. The discussions are likely to be fraught. The Chinese purchase commitments …
7th August 2020
The “nuclear option”? The threat of US sanctions on Chinese banks is drawing renewed attention to their reliance on SWIFT, the financial messaging system used to process most cross-border transactions. SWIFT is a co-operative of global banks and is …
30th July 2020
Xi still see the state as the fix, not the impediment President Xi Jinping gave a speech this week in which he called for a “new development model” that emphasises a greater role for China’s domestic market in response to the global COVID-19 downturn and …
24th July 2020
High savings mean plenty of room to spend more The main event this week was the Q2 GDP release . It beat expectations with growth of 3.2% y/y, fully reversing the contraction in Q1 and taking the level of output above its pre-virus high. This strong …
17th July 2020
The stock market is a blunt policy tool Chinese equites have surged this week, after state-media talked up the need for a stock market rally in order to offset economic headwinds. There is some logic to such thinking. The link between stock prices and …
9th July 2020
Decoupling likely to weigh on productivity growth The passage of the Hong Kong National Security Law this week is putting further strain on China’s fraught relations with the rest of the world. China still has some friends: 53 UN members voiced support …
3rd July 2020
Central government adds to the bond deluge The government and quasi-fiscal entities including LGFVs and policy banks have significantly ramped up borrowing in recent months. To the end of May, only 12% of this was by the central government. But since the …
26th June 2020
Bank lending jumped in Q1, to the highest level relative to trend GDP since 2009. And recent data suggest that it has remained very strong this quarter. But comments yesterday by PBOC Governor Yi Gang suggest that bank lending will drop back in the second …
19th June 2020
More signs that a construction boom is building What stood out most in the survey data for May was the official construction PMI, which rose to a nine-month high. The forward-looking components were particularly upbeat. New orders were the highest since …
12th June 2020
Government spending was subdued at the start of the year, in large part because work on infrastructure projects was disrupted by the COVID-19 lockdown and by the subsequent labour shortages due to the slow return of migrant workers. But now that those …
5th June 2020
China’s National People’s Congress (NPC) ended yesterday. The main economic news came at the opening of the event last Friday, when the government laid out plans for the largest stimulus package since 2009 . However, these plans have been overshadowed by …
29th May 2020
Huawei dispute highlights costs of decoupling The US took further action against China during the past week, including cutting off Huawei from any semiconductor suppliers that use US technology, even if the firms aren’t American. In response, China has …
22nd May 2020
Growth target and policy signals After a delay of over two months, the annual meeting of the China’s legislature, the National People’s Congress (NPC), will kick off next Friday. A schedule has yet to be made public but the key events, the annual work …
15th May 2020