12 Jan 2023 China+ Monitor Plunging New Credit Precedes Likely Revival from Early 2023

• New aggregate financing plummeted in December as China was buffeted by gigantic Covid waves...
• ...But big cities appear to be past the worst, and many other regions are following close behind...
• We expect a marked rebirth of credit demand post-Chinese New Year, building in Q2 onwards.

Duncan WrigleyChina+

28 Sept 2022 China+ Monitor Industrial Profits are Only Headed One Way in China

• After a bumper pandemic, Chinese industrial profits are set for a prolonged decline.
• The manufacturing sector, particularly the privately owned part, faces rising costs and weaker demand.
• Weaker profits growth means weaker revenue growth for local governments, adding to their woes.

Craig BothamChina+

26 Sept 2022 China+ Monitor Property Stimulus Starts to Show in the Data, but Much More is Needed

• August was another bad month for China’s property
  sector, with sales, starts, and prices all falling.
• Bailout funds are visible in the data, but so far have only moved the needle from “terrible” to “very bad”.
• More money is needed to break the downward spiral trapping the sector, and restore market confidence.

Craig BothamChina+

23 Sept 2022 China+ Monitor FX Intervention Begins, as the BoJ Feigns Innocence

• Japan has embarked on direct currency intervention in support of the yen for the first time since 1998.
• The main goal of this intervention is to slow the pace of depreciation, rather than draw a line in the sand.
• Monetary policy will be kept at its current easy settings, undermining any attempt to defend a level.

Craig BothamChina+

19 Sept 2022 China+ Monitor Better Late than Never for China's Reopening Bounce

• Chinese economic data for August surprised to the upside, compensating for a poor July.
• Some of the strength is genuine, thanks to stimulus efforts, but base effects played a role.
• Most of the tailwinds are unlikely to last more than a month, so we expect slower growth in September.

Craig BothamChina+

14 Sept 2022 China+ Monitor Stimulus Efforts are Visible, but China's Liquidity Trap Still Binds

• Chinese credit growth slowed in August, even as liquidity continued to pile up.
• Private sector demand for credit is still weak, leaving the government to drive borrowing and activity.
• Property bailout funds propped up credit demand in August, but this effect will fade soon.

Craig BothamChina+

12 Sept 2022 China+ Monitor A Miss for Chinese Inflation, as a Lukewarm Economy Cools Further

• Inflation is falling faster than expected in China, a sign that demand is flatlining.
• Food is the only source of inflationary pressure remaining, and faces government intervention.
• Talk of monetary policy space, however, sadly is meaningless in a liquidity trap.

Craig BothamChina+

8 Sept 2022 China+ Monitor Headwinds are Building for the Renminbi, as Exports Face Reality

• Chinese export growth slowed more than expected
  in August, as reality catches up after reopening.
• Export growth should continue to weaken, and import compression looks mostly played out...
• ...This means that the last support for the renminbi is crumbling, at a pivotal moment.

Craig BothamChina+

6 Sept 2022 China+ Monitor Zero-Covid is Weighing on Chinese Growth Once Again

• China’s Caixin Services PMI confirmed a loss of
  economic momentum in August.
• Zero-Covid measures are tightening again, and no significant easing is likely in the next two months.
• The PBoC is fighting to defend the renminbi, which further limits its ability to help the economy.

Craig BothamChina+

5 Sept 2022 China+ Monitor China's Liquidity Trap is Creating All Sorts of Problems for the PBoC

• The renminbi is weakening once again, in the face of dollar strength, but that’s not the full story.
• The currency’s ability to defy gravity is fading, and this reflects the growing impotence of the PBoC.
• The liquidity trap is closing tighter, creating an asymmetric profile of outcomes for monetary policy.

Craig BothamChina+

1 Sept 2022 China+ Monitor China's Economy Probably Slowed Further in August, Say the PMIs

• Official survey data point to falling output from China’s factories, and slower services activity.
• Construction activity also apparently is faltering, suggesting infrastructure stimulus is waning.
• The National Congress is coming in October; President Xi, and zero-Covid, are going nowhere.

Craig BothamChina+

24 Aug 2022 China+ Monitor The Global Slowdown is Catching Up with Japan

Japanese manufacturing and services both slowed this month, according to the flash PMI surveys.

Fading global demand is taking its toll on Japanese manufacturing, after a short hiatus.

Covid is the main headwind for the services sector, but not the only one, so any revival will be brief.

Craig BothamChina+