22 Nov 2022 China+ Monitor Korean Exports Indicate Global Economy is in Poor Shape

• Korean 20-day exports fell at a faster rate in November, in a further weakening of global demand.
• Exports shrank to most major markets, with a dramatic decline in shipments to China.
• China’s one-year loan prime rate was unchanged, as the PBoC relied on targeted liquidity measures.

Duncan WrigleyChina+

15 Nov 2022 China+ Monitor China Unleashes 16 Measures for Developer Liquidity Support

• China has issued developer liquidity support policies to help restore confidence in the sector.
• Homebuyers should return to the market in a discerning fashion that favours good developers.
• The property sector recovery will still be geographically uneven and drawn out.

Duncan WrigleyChina+

11 Nov 2022 China+ Monitor China's Credit Data Disappoints, due to Weak Private Sector Demand

• China’s October credit data were below expectations, due to a weak economy, the Party Congress...
• ...The Congress likely disrupted policy-based credit extension for quasi-fiscal projects.
• China is still caught in a liquidity trap, with credit growing more slowly than M2 again in October.

Duncan WrigleyChina+

18 Oct 2022 China+ Monitor Xi's Speech at Congress Signals Policy Continuity

• Xi's Congressional opening speech signalled no immediate shift from current policy settings.
• We see zero-Covid policy continuing until at least mid-2023, if not later.
• The PBoC left the MLF rate unchanged, in implicit acknowledgement of China's liquidity trap.

Duncan WrigleyChina+

13 Oct 2022 China+ Monitor The PBoC Tries Another Tool in an Effort to Escape the Liquidity Trap

• China is still caught in the liquidity trap, but
  policymakers have eased some artificial constraints.
• We will be watching the revived PSL facility for signs that policy support is being scaled up aggressively.
• The BoK delivered a bumper hike, but accompanied it with dovish messaging, as it looks for an off-ramp.

Craig BothamChina+

11 Oct 2022 China+ Monitor Little Relief for China's Economy in Q3, Despite Reopening

• The latest quarterly surveys from the PBoC suggest
  only a marginal improvement in sentiment in Q3.
• Policy efforts have done little to ease the liquidity trap, with households especially gloomy.
• Zero-Covid policies have turned more aggressive ahead of the Congress, choking off recovery.

Craig BothamChina+

21 Sept 2022 China+ Monitor Yen Weakness will Continue to Push Japanese Inflation Higher

• Japanese inflation continues to climb, driven by cost-push pressures and base effects.
• The BoJ will not change tack, despite the multi-year high in CPI inflation.
• We expect Governor Kuroda to hold the line on both inflation and the yen at tomorrow’s meeting.

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+

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+

2 Sept 2022 China+ Monitor A Cold Autumn, and Colder Winter, Looms for Global Exporters

• Korean export growth slowed again in August, and was worse than the headline...
• ...coupled with downbeat regional manufacturing PMIs, the outlook for global trade is bleak.
• Inflationary pressures are at least receding, along with demand, bringing a measure of relief.

Craig BothamChina+

16 Aug 2022 China+ Monitor From Fireworks in June to a Damp Squib in July for Chinese Growth

Chinese activity has slowed sooner than expected; the reopening rebound has failed to gain traction.

Supply-side stimulus measures are the wrong prescription for an economy lacking demand.

The PBoC delivered surprise easing yesterday, but it looks half-hearted, and will achieve little.

Craig BothamChina+

15 Aug 2022 China+ Monitor Weak Credit Growth Highlights a Structural Problem for China

Chinese money growth was better than expected in July, but credit growth disappointed.

Private sector loan demand looks ever weaker, suggesting a limit to gains from monetary easing.

The PBoC is preparing to pare back, with financial stability risks the most likely consideration.

Craig BothamChina+

2 Aug 2022 China+ Monitor Reality Reasserts Itself in China, as the Reopening Rebound Fades

China’s PMIs fell in July, reversing the June bounce, as the gains from reopening were exhausted.

Other sources of demand are few and far between, with stimulus efforts limited in scope and ambition...

...and global demand on the wane amidst multiple headwinds, as clearly shown by Korean export data.

Craig BothamChina+

1 Aug 2022 China+ Monitor No Change from Policymakers in Japan or China on the Horizon

Japan’s Tokyo CPI inflation was marginally stronger than expected, but still driven by cost-push factors.

Yen weakness should relieve pressure on the BoJ, and confirms an outlook of policy stability into 2024.

China’s Politburo has emphasised zero-Covid over growth, with few signals of significant stimulus.

Craig BothamChina+

21 July 2022 China+ Monitor Monetary Policy Can't Save China, as Borrowers Go on Strike

China’s loan prime rates were left unchanged on Wednesday, continuing the PBoC’s passive streak.

Monetary easing would have little effect at the moment, with loan demand falling.

Credit is increasingly being used to plug balance sheets, rather than support productive activity.

Craig BothamChina+

14 July 2022 The BoK Approaches the End of the Road with a Pre-emptive Hike

The BoK hiked by 50bp, but managed to sound dovish about the path ahead.

China’s trade balance hit a record surplus in June, driven by ongoing reopening dynamics.

Domestic demand is falling, with fiscal stimulus still too limited to provide a boost, rather than a floor.

Craig BothamChina+

11 July 2022 China is Headed for a Balance Sheet Recession in Q2

We think China entered a balance sheet recession in Q2, and policy needs recalibrating to fix it.

The combination of the property downturn, tech crackdown, and zero-Covid, have hit asset values.

Balance sheet repair takes time, and breaks monetary transmission; fiscal support is needed.

Craig BothamChina+

28 June 2022 Chinese Profits Under Pressure, and Stimulus is Still Lacking

Chinese industrial profits fell again in May, despite the reopening from lockdown. 

Government support likely propped up profits in some sectors, demand still looks weak. 

The PBoC is injecting liquidity again, but this is about quarter-end management, not stimulus. 

Craig BothamChina+

21 June 2022 Monetary Policy Remains On Hold in China, Despite the Slowdown

Policy rates remain on hold in China, alongside a broader pause in monetary easing.

More accommodative policy seems unlikely to drive growth, given lacklustre credit demand.

Monetary policy needs fiscal help, if it is to regain traction, and not add to financial risks.

Craig BothamChina+