17 May 2022 Recession Now Looks Unavoidable for China, thanks to Zero-Covid

We are lowering our Chinese GDP forecast, as the data for April were closer to reality than expected.

Prolonged zero-Covid restrictions risk permanent economic scarring, limiting any rebound.

China’s property sector is a separate—and over- looked—drag on activity, and set to persist.

Craig BothamChina+

16 May 2022 A Change of Tune from the PBoC Amidst a Slump in Lending

The PBoC has adopted new language in the wake of a slowdown in bank lending...

...But we think this is unlikely to signal a sudden pivot in monetary policy, given other constraints.

The PBoC has no choice but to accept a higher debt ratio, unless it wants to deepen the recession.

Craig BothamChina+

PM Datanote: Money and credit growth, China, April

In one line: Monetary transmission broke down in April, echoing the broader economy 

Craig BothamChina+

25 Apr 2022 The BoJ will Remain Indifferent as Inflation Approaches Its Target

Japanese inflation is still rising, and is all but guaranteed to break through its target in April...

...But the BoJ has already indicated it has no intention of changing tack; rates won't rise this year.

Policymakers are flirting with the idea of currency intervention, but Kuroda won't take the lead.

Craig BothamChina+

22 Apr 2022 The PBoC Buckles Up for the Renminbi's Wild Ride

China's currency is finally succumbing to pressure from multiple fronts, and has further to fall.

The renminbi poses a key constraint to PBoC policy, which Beijing will ultimately override.

April export data from Korea show that China's bat- tle with Covid will weigh heavily on global trade.

Craig BothamChina+

21 Apr 2022 China Drags on Exports, Adding to Japan's Problems as the Yen Drops

Lockdowns and shuttered factories in China appear to be the culprit behind slowing Japanese exports.

Further weakness seems inevitable as Chinese policy tightens, and regional supply chains collapse.

Underperforming exports again raise questions about the benefits of a weaker yen.

Craig BothamChina+

19 Apr 2022 Caught on the Horns of a Dilemma, with Chinese Characteristics

China's economy beat expectations in Q1, but is still falling short of the 2022 growth target.

The GDP data probably overstate economic growth, but either way things will get worse in Q2.

The battle with Covid is proving extremely costly; it will necessitate more stimulus, and soon.

Craig BothamChina+

12 Apr 2022 Plenty of Scope, and Need, for Further Easing in China

China's inflation outlook remains very different to most major economies, despite the energy shock.

The PBoC is able to ease further, with inflation far from its target, but is proving reluctant.

Private sector demand for credit still looks soft, and the PBoC’s power is limited, absent fiscal action.

Craig BothamChina+

PM Datanote: Money and credit growth, China, March

In one line: Improving liquidity provision, but risk appetite is still muted

Craig BothamChina+

11 Apr 2022 Omicron Should Weigh Heavily on Chinese Q1 GDP, in Theory

We are downgrading our outlook for Chinese growth, as zero-Covid policies continue to tighten. 

Data quality is more questionable than ever, though February was softer than it looked. 

Policy support will eventually arrive, but little of substance has materialised, so far. 

Craig BothamChina+

6 Apr 2022 PMIs Show Domestic and External Demand are Diverging for Japan

Japan's services PMI rebounded in March, adding to evidence of a domestic recovery in late Q1.

Unfortunately, 2022 has had a slow start, and GDP probably fell in Q1, quarter-on-quarter.

Inflation still isn't behaving as the BoJ would like, but the sands are shifting on the yen.

Craig BothamChina+

29 Mar 2022 Weaker Chinese Profit Growth Heightens Political Risks

• Chinese industry faces rising costs, both from global markets and domestic Covid policies...
• ...Coupled with weaker demand, this implies that profitability will be under heavy pressure this year.
• Policy efforts to support China's struggling firms will likely raise tensions with trading partners.

Craig BothamChina+

28 Mar 2022 More of the Wrong Sort of Inflation for the BoJ, as the Yen Plummets

• Energy and food push inflation higher, and Japan is set to beat its target next month...
• ...but the BoJ won't be moved, as demand-pull inflation remains as elusive as ever.
• Yen weakness is the biggest challenge to the BoJ's position, and likely will force a shift by H2.

Craig BothamChina+

22 Mar 2022 Korean Exports Falter as Demand and Supply Issues Bite

• Preliminary trade data from Korea point to a loss of momentum for global trade in March.
• War and Covid have tightened some bottlenecks, but demand is also under pressure from oil prices.
• The PBoC again opted not to ramp up monetary easing, despite recent messaging from Beijing.

Craig BothamChina+

21 Mar 2022 The BoJ Splits from the Pack, as Energy Costs Climb

• Japan is not entirely immune to global inflation shocks; CPI is rising as energy costs surge.
• The BoJ, however, has the luxury of choosing the sort of inflation it wants, and will not be hiking.
• Don't get too excited by rumours of a turnaround in Chinese policy; nothing much has changed.

Craig BothamChina+

17 Mar 2022 Japanese Export Momentum Wanes, as Global Problems Mount

• Japanese exports bounced back in February, as holiday effects reversed, but should fade from here.
• Challenges are growing for both demand and supply, with no clear resolution in sight for either.
• China's property market shows no sign of recovery, and policymakers are getting nervous.

Craig BothamChina+

16 Mar 2022 Stronger than Expected, but for How Long, as Headwinds Build

• China's state sector led a rebound in economic growth in early 2022, as investment surged.
• Data is always noisy at this time of year, however, and the surge is driven by frontloading spending.
• Growth will likely slow by April, given soaring Covid cases and base effects, prompting more easing.

Craig BothamChina+

14 Mar 2022 Chinese Stimulus Underwhelms as Risk Appetite Remains Muted

• Monetary easing is yet to result in more credit reaching the private sector, as lending slows.
• The state sector is still the driving force behind credit expansion, amidst elevated risk aversion.
• We expect the policy response to strengthen now the NPC is over, but remember, stability is the goal.

Craig BothamChina+

28 Feb 2022 Japanese Inflation is Creeping Higher, but the Target is Still Distant

• Tokyo CPI inflation reached its highest level since December 2019 in February, and will climb further.
• The target is still unlikely to be breached, however, and this is not the type of inflation the BoJ wants.
• The BoK remains hawkish, despite holding rates, and the hiking cycle has further to run.

Craig BothamChina+

22 Feb 2022 A Winter Chill in East Asia in Early February, but a Thaw is Coming

• Korean exports had a slow start to February, chiefly because of holidays in Korea and China.
• Japanese manufacturing similarly looks soft at the moment, but should recover almost fully in March.
• Little sign of supply chain improvements so far, but a reopening is underway in China.

Craig BothamChina+