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…
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…
Allianz GI | The market reaction to the conclusion of China’s Party Congress is telling. The Hang Seng China Enterprises Index (a gauge of key China stocks listed in Hong Kong) fell more than 7% on the first day of trading after the Congress. The CSI 300 (onshore China’s equivalent of the S&P 500) as well as the broader Shanghai and Shenzhen stock exchanges saw a far more muted reaction.1…
Luís Pinheiro de Matos (CaixaBank Research) | China’s real estate sector is often described as «the most important sector in the world» because of the importance it has amassed in recent decades in the Asian giant’s growth model. We analyse how significant a role it plays in the Chinese economy and the risks of the Evergrande effect.
Kent Matthews ( The Conversation) | Growth in China was in fact declining well before the pandemic struck: from a peak of 15% in the second quarter of 2007 to 6% in the first three months of 2019. The nation’s growth strategy rests on four pillars. Three are frequently talked about – infrastructure, exports and consumers – while the fourth is only whispered in official circles – and that is the property sector.
Peter Rodgers | While providing a credible US-led alternative to the Belt and Road Initiative is desirable, the US must commit adequate financial and leadership resources to the effort. This is a good first step, but Washington must be careful not to create a new paranoia by demonizing economic and geopolitical rivals such as China and Japan to the point where it distorts priorities and leads to increased military spending rather than public investments in education, infrastructure and basic research, all of which are critical to America’s future prosperity and security.
China’s country’s largest real estate company, Evergrande, which is on the verge of bankruptcy with more than $300 billion in debt (about 2% of China’s GDP), has announced that it will not be able to pay interest next week. Weak home sales, especially in the last year, have put it in this cash-strapped position. Therefore, the situation is becoming increasingly tense. The group is described by Beijing as a “grey rhinoceros”, i.e., a large company with an alarming debt load representing a systemic financial risk.
Aberdeen Standard Investments | Now the world’s second largest economy, China continues to grow at a far faster rate than other major markets. Driven by investment, manufacturing and exports, GDP expanded 2.3% year-on-year in 2020. It underlines how China’s economy was first in, first out of the Covid-19 pandemic and the successful measures taken to contain the initial outbreak and subsequent infection waves.
China’s economic activity in August exceeded expectations, with industrial production accelerating at the strongest pace in eight months and retail sales growing for the first time this year. The activity data shows that the recovery is becoming more balanced and broad-based as private sector demand is gaining momentum.
Daniel Wagner | China’s footprint in global foreign direct investment has increased notably since the launch of the Belt and Road Initiative (BRI) in 2013. That served to bring Chinese overseas FDI closer to a level that one would expect, based on the country’s weight in the global economy. However, China actually invested more in countries outside the BRI during the period, given that Chinese investment in developed countries tends to have larger market values, particularly for mergers and acquisitions.