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Tourism still in the doldrums China recorded 115 million domestic tourism trips during the Labour Day holiday that ended on Tuesday. This was more than double the 43 million trips during the Qing Ming holiday in early April, a jump that many interpreted …
8th May 2020
Recovery remains slow and uneven The official composite PMI was broadly unchanged in April, consistent with a further recovery but at a slow pace relative to the abrupt downturn in February. The breakdown suggests that weak exports led to a slowdown in …
30th April 2020
In its meeting last week, the Politburo introduced a new slogan: the “Six Ensures” (六保). The first is an instruction to officials to “ensure employment”. On paper, they are doing pretty well. At the end of March only two million people were claiming …
24th April 2020
GDP likely to remain below 2019 levels in Q2 The main event this week was the release of the Q1 GDP figures, which showed a 6.8% y/y fall in output, the first contraction since quarterly GDP figures were first published in 1992. We covered the data in …
17th April 2020
Q1 GDP to contract barring massive falsification The government will publish Q1 GDP figures next week in what will be an unprecedented test of its willingness to acknowledge economic weakness. There have been doubts about the GDP data for years. Most …
9th April 2020
An uneven recovery The first monthly data points for March are so far broadly consistent with what the daily indicators we track have been showing – that activity began to recover last month but remains weak. The PMIs were derided by some as implausibly …
3rd April 2020
Pulling down the shutters China has continued its slow return to normality this week. Remaining restrictions on movement within the country are being relaxed. Residents of Hubei outside Wuhan are now free to travel; Wuhan’s lockdown will end in early …
27th March 2020
GDP target unachievable, more stimulus needed Officials in China are in the midst of reviewing the 2020 targets that were set (but not made public) during the Central Economic Work Conference in December. The new targets will be announced at the National …
20th March 2020
PBOC may revive old policy tool Policymakers have signalled that further monetary loosening is imminent. The State Council is calling for cuts to banks’ required reserve ratio (RRR) and PBOC officials are dropping hints about a possible cut to benchmark …
13th March 2020
Activity continues slow march back to normality Disruption from efforts to contain the coronavirus outbreak has continued to ease during the past week, with most of the daily indicators that we track on our coronavirus webpage pointing towards recovery. …
6th March 2020
Foreign demand and global supply chains at risk The number of new COVID-19 cases in China continued to decline this week. But local officials still appear cautious about relaxing containment measures, for fear of being held responsible for a renewed …
28th February 2020
Half of the economy running at half speed While the number of new coronavirus cases has continued to trend down in the past week, the disruption to economic activity has persisted. There are some tentative signs of an uptick in property sales and …
21st February 2020
Virus has pushed economy into extended slumber During the week-long holiday that follows Lunar New Year day (25 th Jan. this year) it’s common for much of the economy to slow or even grind to a halt as workplaces shut down and migrant workers return home. …
14th February 2020
Some signs spread of virus may be slowing… China’s near-term economic outlook hinges on how long measures to contain the spread of the virus remain in place. We know that the hit to activity has been significant , though – as today’s delay of the release …
7th February 2020
The new coronavirus was first identified exactly a month ago. In our first mention of it three days later, we noted that it was “drawing comparisons to SARS.” Initially, SARS was an illustration of how bad the outbreak could be. But SARS now looks like a …
31st January 2020
Virus starting to take a toll on economic activity When we first discussed the potential impact of the coronavirus on Tuesday, there were 300 confirmed cases and six fatalities. Those numbers have since jumped, to 830 infections and 25 deaths. The rapid …
24th January 2020
Hurdles remain to Wall Street’s China dream The Phase One trade deal signed this week includes commitments by China that will widen market access for US non-bank financial institutions (NBFIs). Foreign ownership caps on insurance, securities, futures and …
17th January 2020
Recovering pork supply to offset higher oil prices Fuel prices jumped in December, pushing non-food inflation to a 5-month high. Another pick-up seems likely this month, even though the spike in oil prices following the killing of Iranian General …
10th January 2020
Hukou reform not a gamechanger for property The scrapping of restrictions on residency (hukou) in smaller cities announced last week might give a boost to property markets in some places but it will be small. With urbanisation slowing and population …
3rd January 2020
Bond defaults hurting credit allocation Corporate bond defaults continue to dominate the headlines. As we argued two weeks ago , the recent pick-up in defaults adds to broader evidence that corporate balance sheets remain under strain. That said, it …
20th December 2019
“Phase One” deal may not stick A deal appears to have been reached which will avoid the tariffs on $160bn worth of US imports from China that were scheduled to come into force on Sunday. The details have yet to be confirmed but China has reportedly agreed …
13th December 2019
Bond defaults picking up again Corporate bond defaults have surged again recently, having subsided during the first half of this year. The value of bonds defaulting this year is now on course to exceed last year’s total. (See Chart 1.) Chart 1: Onshore …
6th December 2019
US politicians are all China hawks now The HK Human Rights and Democracy act that President Trump signed into law this week does not require any immediate changes in US relations with China and Hong Kong, but it underlines the extent to which “standing …
29th November 2019
Trump may move slow on HK bill amid trade talks On Wednesday, the US Congress passed the HK Human Rights and Democracy Act in a near-unanimous vote. Trump will need to sign the bill by early December unless he decides to veto it, which is unlikely as a …
22nd November 2019
US tariff rollback would offer meagre gains Despite some hiccups, US and Chinese negotiators still appear to be making progress towards a “Phase One” trade deal. In an encouraging step, both countries have relaxed restrictions on bilateral poultry imports …
15th November 2019
Phase One comes into focus The outlines of a “Phase One” trade deal with the US are coming into focus. The two sides have agreed in principle to a “proportional” rollback of tariffs, according to China’s commerce ministry, with China also likely to pledge …
8th November 2019
Plenum offers few clues on economic policy The communique released following the end of China’s Communist Party Plenum was long, but barely touched on the economy and, where it did, it said nothing new. Mentions of “the decisive role of the market in …
1st November 2019
Industrial policy still at odds with market reforms Chinese authorities announced new regulations this week that promise to cut red tape and help level the playing field for different types of firms from 1 st January. This appears partly aimed at …
25th October 2019
Further policy tightening for property Bank lending to the real estate sector continued to slow in Q3 according to quarterly data published by the People’s Bank this week. (See Chart 1.) This reflects policy tightening for the sector which shows no signs …
18th October 2019
A mini trade deal probably wouldn’t last The US and China may be on the brink of a mini deal that postpones the US tariffs that are due to come into force next Tuesday. China has reportedly offered to buy more US agricultural goods in return. It has …
11th October 2019
US investment curbs unlikely to trump tariffs Recent media reports suggested that the Trump administration is considering ways to restrict US capital flows into China, including delisting Chinese firms from US stock exchanges and prohibiting government …
4th October 2019
Too much of a good thing? Beijing’s new airport opened its doors this week. It will more than double the city’s passenger capacity, taking it well above other major international hubs, including New York, London, Tokyo, Hong Kong and Dubai. Even if …
27th September 2019
Fiscal stance still accommodative Government spending contracted in August, leading some to question the strength of fiscal support. But with tax cuts still weighing on revenue growth, the budget deficit remains close to its widest ever. (See Chart 1.) …
20th September 2019
How much food is in the basket? Pork prices in early September are 70% higher than they were this time last year. How credible is it that overall consumer price inflation is just 2.8% y/y? Unlike most statistics agencies, China’s doesn’t publish the …
13th September 2019
PBOC kicks into gear but fiscal stance unchanged The People’s Bank (PBOC) was quick to answer the State Council’s recent call for more stimulus, announcing a cut to banks’ required reserve ratio (RRR) today. (See here .) More policy easing will probably …
6th September 2019
Back when a trade war was just a rallying cry in Donald Trump’s presidential campaign, he pledged to put a 45% tariff on all Chinese goods. 45% on some products no longer seems unlikely. But both sides are opting to avoid across-the-board tariffs, …
30th August 2019
PBOC could fend off a US attack on the RMB There is speculation that the Trump administration could attempt to weaken the US dollar by intervening in FX markets to push up the value of the renminbi. But we doubt such efforts to influence China’s exchange …
23rd August 2019
Foreign firms hardest hit by industrial slowdown Growth in industrial value-added fell to a 17-year low in July, according to data published this week, triggering renewed concerns about China’s economic outlook. Admittedly, these figures haven’t always …
16th August 2019
More depreciation ahead The People’s Bank (PBOC) allowed the renminbi to weaken beyond 7.00 against the US dollar this week in response to Trump’s most recent tariff threat. We doubt the PBOC would have taken this step if it wasn’t willing to let the …
8th August 2019
Tariff man strikes again President Trump re-escalated trade tensions overnight by announcing a 10% duty, effective 1 st September, on the $300bn worth of US imports from China yet to be subject to tariffs. We estimate that this will directly knock of …
2nd August 2019
Limited trade war impact on FDI flows, for now There was no net increase in direct investment by Chinese firms in the US last year according to the annual US Bureau of Economic Analysis report on direct investment, which was published this week. (See …
26th July 2019
Builders report slower growth in Q2 China’s economy has faced multiple headwinds over the past year, but it has also received a significant – and underappreciated – boost from accelerating property construction. Property developers report having ramped up …
19th July 2019
PBOC rate cut on 1 st August? The Fed has all-but-confirmed that it will cut rates at its upcoming meeting on 31 st July. The PBOC is likely to follow suit, perhaps the next day, with a reduction to its reverse repo rates, the rates at which it lends to …
12th July 2019
Fiscal policy being loosened again Early last month, the State Council announced measures to help shore up infrastructure spending. (See here .) Data published this week suggest that this has already led to a shift in the fiscal stance. After dropping …
5th July 2019
Would a G20 truce last? The G20 summit kicked off in Osaka today, with Presidents Trump and Xi scheduled to meet tomorrow. Recent media reports suggest that they will agree to restart formal trade negotiations and hold off imposing new tariffs for the …
28th June 2019
In a Focus last month, we discussed what we see as the most plausible hard landing scenario for China: troubles at a small bank that spread to the interbank market and trigger a systemic banking crisis. There are disconcerting similarities in the …
21st June 2019
The first regulatory takeover of a Chinese bank in more than two decades is a reminder that the balance sheets of many regional lenders are far less healthy than they claim. China’s interbank market mostly shrugged off the move since it reinforced the …
31st May 2019
If strictly enforced, the US decision to ban Huawei from doing business with American firms would be major headache for the company, which accounts for around 0.2% of Chinese GDP. And the move may also make it more difficult for the two countries to reach …
17th May 2019
The government’s plans to make it easier for rural migrants in small cities to acquire urban residency permits have raised hopes of a revival in property sales. But the nationwide impact will probably be marginal unless restrictions in larger cities are …
12th April 2019
Premier Li spoke to the press at the close of the National People’s Congress (NPC) today. He offered further details on the timing and scale of policy support – smaller than in previous cycles but probably enough to stabilise growth later this year. …
15th March 2019