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China’s March manufacturing PMI stands at 51.9 (52.6 previous), services PMI rises to 58.2 (56.3 previous)

Link Securities | China’s official advance manufacturing activity index, the manufacturing PMI, came in at 51.9 in March, above the 51.6 expected by the analysts’ consensus, although it was below the 52.6 of the previous month. We recall that a reading above 50 points indicates expansion of activity from the previous month, while a reading below that level indicates contraction of activity. Most components decelerated after February, although production, new…

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China reopening already noticeable: industrial production and retail sales up 2.4% and 3.5% in February

Bankinter : Several positive data in China. While Retail Sales (Jan+Feb) improve to +3.5% year-on-year, as expected vs -1.8% previously, Industrial Production (Jan+Feb) improves to +2.4% year-on-year vs +2.6% esp. and +1.3% previously. Also, the Unemployment Rate (Feb) rebounds to 5.6% vs 5.3% esp. and 5.5% previously. Finally, the PBoC injected the largest amount of liquidity since December 2020 via a medium-term credit line. Specifically, it amounted to CNY 281…

Li Quiang

New Chinese Premier Li Qiang believes 5% growth target ‘will not be easy’

Link Securities | In his first press conference after becoming China’s new premier, Li Qiang said it will not be easy for China to reach the 5% growth target, and that it will require redoubled efforts. Li reiterated the specific policies developed last December at the Central Economic and Labour Conference (CEWC) and prioritised stability in growth, prices and employment. In addition, Li said China will coordinate macroeconomic policies by…

Xi Jinping

China’s 2023 Government Work Report: Safe growth target contrasts with bold employment objective

Alicia García Herrero (Natixis) | Against the backdrop of the recent reopening after three years of zero-Covid policies, the Chinese government, in the last government report of Prime Minister Li Keqiang during the Two Sessions, has set a GDP growth target of around 5% in 2023. Such a target is lower than our growth forecast of 5.5% for 2023, and lower than last year’s government target (5.5%). This is somewhat…

china central bank

PBOC continues to leave interest rates unchanged with January inflation at 2.1% – lower than other countries

Bankinter : The Central Bank keeps interest rates unchanged. The one-year benchmark stands at 3.65% and the five-year at 4.30%. OPINION: The PBOC is not making any changes, in line with expectations. It is one of the few central banks that maintains an accommodative monetary policy to mitigate the impact of the pandemic, the loss of global momentum, which impacts its exports, and the housing crisis. It is maintaining this…


China’s overseas tourism data hint at disguised but smaller capital flights

Alicia García Herrero (Natixis) | As the world awaits the return of Chinese tourists, a long-standing question may reemerge. China has gradually opened its capital account over the past decade, but there are still considerable restrictions. As a result, tourism has become one of the channels for capital flights based on the difference between the balance of payment data in China and globally. But there is a major problem with…

china economyTC

China inflation rebounds to 2.1% but still far from central bank’s target

Bankinter : Inflation rebounded three tenths to +2.1% in January (in line with expectations), but the fall in producer prices gained inertia (-0.8% vs -0.5% expected vs -0.7% previously). Analysis: The rebound in inflation is explained by the rise in food prices (+6.2% vs +4.8% previously) and the increase in demand, especially in leisure-related products and services after the lunar year. The decline in producer prices is good news because…

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The positive spillover of China’s revenge outbound tourism

Alicia García Herrero (Natixis) | The grand comeback in Asia is taking shape, but there is one missing piece. Although China, the world’s largest international travel spender, is still on its recovery path, it will eventually return to global prominence. Before the COVID pandemic, Chinese tourists had become an integral part of the global tourism sector with their spending share rising from 8% in 2010 to 16% in 2019. The…

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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…