China

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China eyes consumption as main engine of growth

The Chinese government is looking to consumption as the “main engine of growth” for the Chinese economy this year, mainly as a result of the abandonment of China’s “zero covid” policy. Li Keqiang, China’s prime minister, said this weekend that the consumption of the country’s 1.4 billion people is “a key step to expand domestic demand”.


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China ended 2022 on a gloomy note but reopening will save 2023

Alicia Garcia Herrero & Jianwei Xu (Natixis) | Chinese economy ended 2022 by growing only 3% YoY, with the last quarter GDP slowing further to 2.9% YoY. The figure was finally much lower than the target set during the Two Sessions by the Chinese government mainly because of the heavy mobility restrictions imposed under zero-Covid policies since the Shanghai lockdown. The slowdown in Q4 was particularly reflected in the decelerating consumption…


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China growth 3% in 2022, lowest since 1970s, while population falls for first time in 6 decades

Banca March | The weakness of China’s growth in the latter part of last year was confirmed yesterday. China’s GDP stagnated in Q4 2022, registering zero growth compared to the previous quarter, bringing cumulative growth in 2022 to +3% year-on-year, the second lowest annual growth since 1970. Despite this, it is worth noting that the 4Q growth figure was higher than expected (a contraction of more than 1% quarter-on-quarter was…


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China’s overall trade surplus in 2022 reaches all-time high of $878 Bn

Bankinter| China’s December Trade Balance records a surplus of +$78B vs +$76.9B estimated and +$69.84B previous. Exports decelerate -9.9% vs -11.1% estimated and -8.7% previous. Imports also, but less: -7.5% vs -10% estimated and -10.6% previous. Opinion: The trade surplus widens, which is good news, but it is due to lower imports (a symptom of weak domestic demand) and not to a rise in exports. In fact, exports are falling,…


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China likely to be most affected by the EU’s new Carbon Border Adjustment Mechanism

Alicia García Herrero (Natixis) | On 13th December 2022, the EU passed a deal to set up a Carbon Border Adjustment Mechanism (CBAM) to arrest the carbon leakage problem and further support the energy transition. Carbon leakage in this context equates to the scenario that EU countries import carbon-intensive products from countries where carbon emissions are not taxed. More specifically, under CBAM, EU firms will need to pay the difference…


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China to open faster than expected but with risk of reversal given low vaccination rate

Alicia García Herrero (Natixis) | Uncertainty about China’s growth prospects next year is unprecedently high. Most importantly such uncertainty hinges more than ever on a single issue: the speed – and smoothness – of China’s opening-up from zero-Covid policies after three years of intermittent lockdowns. The speed of opening-up is key because mobility is closely correlated with China’s consumption and economic activity, more generally. In fact, we have estimated that, in…


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Chinese consumers – life beyond Singles’ Day

Nicholas Yeo (abrdn) | The world’s biggest annual shopping event is not America’s Black Friday, it’s China’s ‘Singles Day’, held on 11.11, as the date symbolises both those who are single and those who have newly formed a couple. Across the country, people treat themselves and each other to presents, parties and shopping splurges. The unstoppable rise of the Chinese consumer means the celebration has become the world’s largest online…


XI Biden

Biden, Xi focus on Taiwan and forget about Ukraine

Alicia García Herrero * (Natixis) | It is hard to imagine a more momentous meeting than the one Presidents Joe Biden and Xi Jinping just held on the sidelines of the Group of Twenty meeting in Bali. Russian President Vladimir Putin’s absence certainly made things easier, as it opened the door for the G20 communiqué to address the Ukraine war, but it is not going to go beyond a compromise…


Belt and Road at five years

Will the Belt and Road Initiative be another casualty of the pandemic?

Alicia García Herrero (Natixis) *| China’s grand infrastructure development strategy, the Belt and Road Initiative (BRI), has suffered as a result of the COVID-19 pandemic, at least when measured by the amount of funds lent or invested by China in BRI projects. This decrease in funding is one of the most visible signs of China’s increasing isolationism and worsening global image. President Xi announced China’s most important soft-power strategy on…


China EU trade deal

EU Should Demonstrate Unity toward China

The ifo Institute has called for a show of unity toward China. In recent years, the trade imbalance between Germany and China has tipped significantly in China’s favor, but the same is not true for EU-China trade relations, according to an ifo study. “For this reason, it is questionable whether Chancellor Olaf Scholz’s trip to China will on its own be enough to send the right message. It would have…