12 May 2022 Food is Driving Up Chinese Inflation, but the Core Rate is Falling

Chinese CPI inflation jumped in April, due to soaring food prices, but that will not worry the PBoC.

Zero-Covid has pushed up food prices, even as it depresses core inflation.

The PBoC has joined fiscal policymakers in making announcements with no new information.

Craig BothamChina+

10 May Trade Disruption Builds for China, as Restrictions Tighten

Zero-Covid caught up with Chinese exports in April, as inventories were exhausted...

...But demand played a role too, with higher energy prices dragging down trade with Japan and Europe.

The fundamental backdrop for the renminbi is deteriorating, highlighted by plunging FX reserves.

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+

14 Apr 2022 Zero-Covid Weighs on Trade, and Obliterates Domestic Demand

China's trade surplus enjoyed a final lift in March, as import demand collapsed, and exports rose...

...But look through the seasonal distortions, and exports were weaker than they appeared.

Beijing has promised to offset some of the pain from zero-Covid, but stimulus looks light, to us.

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+

1 Apr 2022 A Sharp Slowdown for China in March, but No New Stimulus, Yet

• China's economy is groaning under the strain of increasingly restrictive zero-Covid policies.
• Factory closures and lockdowns took a heavy toll on both manufacturing and services in March.
• Policymakers are relying on the existing toolkit, deployed more rapidly, for now.

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+

4 Feb 2022 Korean PMIs Lend Further Support to Strong External Demand Picture

• Korea's manufacturing sector is having a happy new year, despite Omicron outbreaks.
• The PMI survey provides encouraging signs for global demand, with new export orders bouncing...
• ...It also points to an easing of some bottlenecks, with more to come as stockpiling fades.

Craig BothamChina+

7 Jan 2022 Service Growth is Overstated, but Inflation Really is Fading

• China's service sector PMIs are surprisingly strong, given the Covid outbreaks in December.
• We think financial activity is distorting the readings, which are unlikely to be followed by real growth.
• Inflation pressures are receding, leaving policy free to focus on the growth challenge this year.

Craig BothamChina+

5 Jan 2022 Regional PMIs Show Fading Inflation Despite Bottlenecks

• Manufacturing PMIs point to an inflection in inflation pressure, despite stretched supply chains.
• External demand has weakened, but we think it will prove to be short lived.
• Recent Covid outbreaks in China threaten renewed tightening of global bottlenecks.

Craig BothamChina+

10 Dec 2021 China Finds Seasonal Cheer in November Inflation

• Chinese consumer price inflation accelerated in November, driven by food prices...
• ...but base effects will soon weigh on the index, such that November marks the near-term peak.
• Producer price inflation has already begun to rollover, as energy prices start to fall.

Craig BothamChina+

16 Nov 2021 Chinese Industry Avoids Calamity, but Q4 Looks Set for Weakness

• China's October activity data were better than ex- pected, but chiefly reflecting a low bar.
• Industrial production growth staved off collapse, but is still near multi-decade lows.
• The property sector is a chronic, and building, headwind for the economy.

Craig BothamChina+

18 Oct 2021 China's Cost Shock Creates Problems Everywhere

• Surging factory gate prices have just begun to re- flect recent energy shocks.
• The Chinese consumer may be shielded from the energy hit, but China's economy will still suffer.
• Global spillovers seem likely, with further cost in- creases to come as winter looms.

Craig BothamChina+