Tag Archives: Chinese economy

With additional tariffs in the pipeline, should the Fed take notice?US President Trump pre-announced a further expansion of the US tariffs on imports from China: the remaining half of imports not yet taxed will be at a rate of 10%. It was our central scenario that the tariff net would be increased before the 2020 elections, but we are surprised by the timing, so close on the heels of the G20 meeting in Osaka.Such tariffs further reduce the possibility of an encompassing trade deal with China...

Downward pressure on growth persists amid ongoing trade tensions.Chinese real GDP growth came in at 6.2% year-over-year (y-o-y) in Q2, down from 6.4% in Q1, and the lowest quarterly growth in over two decades.The tertiary sector (mainly services) continued to lead growth, expanding by 7.0% y-o-y in Q2, the same as in Q1. In comparison, growth in the secondary sector (mainly manufacturing) declined to 5.6% y-o-y, from 6.1% in the previous quarter.From an expenditure perspective, consumption...

Downward pressure on growth persists amid ongoing trade tensions. Chinese real GDP growth came in at 6.2% year-over-year (y-o-y) in Q2, down from 6.4% in Q1, and the lowest quarterly growth in over two decades. The tertiary sector (mainly services) continued to lead growth, expanding by 7.0% y-o-y in Q2, the same as in Q1. In comparison, growth in the secondary sector (mainly manufacturing) declined to 5.6% y-o-y, from...

The Chinese government set new economic targets and policy announcements for 2019, broadly in line with what we had been expecting.The new economic targets for 2019 and policy announcements are broadly in line with our expectations. They generally reflect Chinese policymakers’ intention to support growth in the face of economic headwinds but to avoid massive stimulus.The target for real GDP growth for 2019 was lowered to a range between 6.0% and 6.5%, from “around 6.5%” in 2018 and 2017,...

Latest data point toward continued deceleration in China in February, especially in the external sector.Chinese official manufacturing and non-manufacturing purchasing manager indexes (PMI) fell again in February, following a pause in January. The manufacturing PMI came in at 49.2, down from 49.5 in the previous month. The non-manufacturing PMI, while continuing to signal expansion, also fell in February—to 54.3, from 54.7 the previous month.The data show a divergence between the...

The latest cut in banks’ required reserve ratios seems likely to have been motivated by additional signs of slowdown in the Chinese economy, but may not herald a massive monetary stimulus.Over the weekend, the People’s Bank of China (PBoC) announced a cut of 100 basis points (bps) in banks’ required reserve ratio (RRR). This is the third RRR cut since April. The PBoC estimates that it will free up about Rmb 750 billion of net new liquidity in the banking system. According to the central...

According to the Chinese State Administration of Foreign Exchange (SAFE), China’s FX reserves amounted to USD3.14 trillion at end – December 2017, up USD20.7 billion from the previous month. This marks the 11th consecutive monthly increase in Chinese FX reserves since February 2017. In full – year 2017, Chinese FX reserves increased by USD129.4 billion, in contrast with a drop of USD512.7 billion in 2015 and USD320...

The decline in capital outflows may suggest that investors’ sentiment towards China is improving.According to the Chinese State Administration of Foreign Exchange, China’s FX reserves amounted to USD3.14 trillion at end-December 2017, up USD20.7 billion from the previous month. This marks the 11th consecutive monthly increase in Chinese FX reserves since February 2017. In full-year 2017, Chinese FX reserves increased by USD129.4 billion, in contrast with a drop of USD512.7 billion in 2015...

A new development zone south of Beijing could turn out to be the most important domestic infrastructure project in China in the decade to come and lead to large-scale economic change.At the beginning of April, the Chinese government caught people by surprise by unveiling plans to create the Xiong’an New Area, a new development zone about 130 kilometres south of Beijing. According to the announcement, the first phase of development will cover an area of 100 square kilometres, with long-term...

The latest economic data indicate a steady pace in the Chinese economy as 2016 draws to a close. But while we don’t expect a hard landing, 2017 will bring challenges for China on many fronts.The latest data releases out of Beijing indicate steady momentum in the Chinese economy. Exports are showing signs of recovery and investment in manufacturing is helping to offset a recent drop in property investment. All in all, the latest data releases are consistent with our full-year GDP forecast of...