3 May 2022 Zero-Covid, Sub-Zero Growth, China's Economy Cratered in April

The tightest zero-Covid policies since the Wuhan outbreak have crushed Chinese economic activity.

Spillovers to global trade are already apparent, and will get worse before they get better.

Zero-Covid is not going away; the stakes are too high, so be ready for disruption throughout 2022.

Craig BothamChina+

CHINA+ DATA WRAP 27 APR 2022: Chinese industrial profits growth rose in March

Some good news, but it's not going to last

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+

CHINA+ DATA WRAP 18 APR 2022: Slightly better than expected, but worse to come for China

A dilemma for policymakers

Factory closures weighed on industrial production

Infrastructure supported sagging FAI, but not for much longer

The biggest Covid casualty will continue to bleed out

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+

7 Apr 2022 The Tourniquet of Zero-Covid Squeezes China's Service Sector

China's services sector suffered a heavy blow in March, as collateral damage in the war with Covid.

Shanghai is paying dearly for its earlier relaxed approach to rising cases, and faces a long lockdown.

Shanghai's mistake will encourage officials to double down on zero-Covid, despite the costs.

Craig BothamChina+

4 Apr 2022 Whether China Sneezes, or Locks Down, Asia Catches a Cold

• China's lockdowns and other restrictions weighed on regional activity in March, particularly exports.
• Factory closures in China have tightened some bottlenecks, but others may have loosened.
• The war in Ukraine has added to cost pressures, and worse is to come on both fronts.

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+

CHINA+ DATA WRAP 28.03.2022: Chinese industrial profit growth stalls

Pressure builds on Chinese manufacturing

Craig BothamChina+

CHINA+ DATA WRAP 15.03.2022: Chinese data outstrips all expectations

A state-led recovery in investment...

…likely rippled through to the rest of the economy    

Is the data reliable?

Craig BothamChina+

2 Mar 2022 Winter's Chill Starts to Fade in China, but Spring Isn't Here Yet

• China's activity surveys were better than expected in February, and a touch of optimism is warranted...
• ...but should be freighted with caution, given holiday effects, and evidence that demand is still soft.
• Policy stimulus is feeding through, but stability is the watchword, not explosive growth.

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+

18 Feb 2022 China Weighs on Japanese Exports, but Weakness is Overstated

• Japanese export growth slowed unexpectedly in January, but it's not as bad as it looks...
• ..factory closures in China, thanks to holidays, pollution, and Covid, explain much of the weakness.
• We remain positive on the global demand backdrop for exports, but supply congestion is rising.

Craig BothamChina+

11 Feb 2022 The State Sector Doubles Down as Risk Appetite Dwindles

• Record weakness in Chinese M1 growth is only partly attributable to seasonal and base effects...
• ...Weaker risk appetite, and softer economic activity, underlie the drop in liquid deposits.
• Credit growth continued to become more heavily dominated by the state in January.

Craig BothamChina+

7 Feb 2022 China's Battle with Omicron is Imposing Real Economic Costs

• China is struggling to contain Covid, despite more aggressive suppression policies.
• The cost of zero-Covid is rising with variant transmissibility, but a near-term pivot is unlikely.
• We expect China to stick to its guns in 2023, but the trade-offs are shifting.

Craig BothamChina+

2 Feb 2022 Korean Exports are Doing Better than the Data Suggest

• Korean exports indicate continued strong external demand, despite the January slowdown.

  Holiday distortions and base effects weigh on the year-over-year number.

  Bottlenecks, and Chinese factory closures, are the main risks to the outlook.

Craig BothamChina+

1 Feb 2022 A Trifecta of Disruptions Hits Chinese Activity in January

• Chinese factory closures—thanks to Covid, holi- days, and pollution—led to soft manufacturing data.
• Covid alone is the prime suspect for weakness in services activity, and is not yet under control.
• Policy is yet to turn growth around, but we expect the floor to emerge by March.

Craig BothamChina+

CHINA+ DATA WRAP 27.01.22 - Chinese Industrial Profits

Propped up by the pandemic, profit growth is returning to normal

Craig BothamChina+