chinese economy

coronavirus china

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…


coronavirus china

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 Jinping's gives clues to China’s future economic policy

China’s Party Congress: doubling down on the direction of travel

Alicia García Herrero (Natixis) | After months of preparation and concerning sentiment stemming from a deteriorating external environment, Covid-related restrictions and the plummeting real estate sector, the Communist Party’s 20th Congress has started with President Xi Jinping delivering the work report. Below are some key take-aways: 1. Dynamic zero Covid policies remain in place, sealed by the success in saving lives during the past few years. No clear exit strategy has been…


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Lockdowns Around Shanghai Are Especially Painful For Cars, Electronics And Chip-makers

Alicia García Herrero (Natixis) | When the Chinese economy sneezes, the global supply chain catches a cold. After the successful containment at the initial stage, China has decided to maintain its dynamic zero-covid strategy against a more contagious albeit milder variant of the virus, namely Omicron. The approach has initiated the lockdown in Shanghai. Given its economic size, trading role, and the contagion risk of lockdowns in the surrounding provinces,…


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The Playbook For Chinese Carmakers To Mitigate Waning Domestic Demand And Higher Costs

Alicia García Herrero (Natixis) | After three years of sluggish performance, China’s car sales finally reverted to positive growth in 2021. The auto industry is essential for the Chinese economy as it forms 28% of retail sales and 7% of industrial revenue. Without a recovery in car sales, it is hard to imagine a solid rebound in consumption. In this note, we analyze the demand for passenger cars in China…


China Services PMI

What Does China’s 2021 Energy Crunch Mean For Its 2022 Macroeconomic Outlook?

Alicia García Herrero (Natixis) | Even with more than two years after the first outbreak of COVID-19, China, as well as the rest of the world, still faces the impact of the pandemic. While the economy has surged from the bottom since the middle of 2021 after China’s successful containment of the domestic spread of the virus, the recovery’s momentum has slowed down quite rapidly, especially since the second quarter…


An exterior view of China Evergrande Centre in Hong Kong

China’s Regulatory Crackdown: What To Expect?

Alicia García Herrero (Natixis) | Chinese policy makers have been engaged in a massive regulatory crackdown for over a year. A number of sectors have been affected, starting with the tech sector, followed by the education sector. At the same time the real estate sector has also been severely affected by a specific regulatory crackdown (the three red lines) and a more general antitrust push has also taken place. In…


china central bank

Q4 GDP Enough To Set China’s 2021 Growth Above The 8% Benchmark But With Challenges Ahead For 2022

Alicia García Herrero (Natixis) | Chinese economy has rebounded by 8.1% in 2021 after slumping to 2.2% in 2020. While the Q4 year-on-year growth rate was lowered to only 4%, the current growth momentum was still positive as the QoQ growth rate (seasonally adjusted) have accelerated to 1.6% in Q4 from 0.7% in Q3. However, there are signs that the Chinese economy is facing increasing challenges, raising questions on whether…


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China Is At The Start Of An Easing Cycle

Alicia García Herrero (Natixis) | The PBoC cut the Required Reserve Ratio (RRR) by 0.5 percentage points yesterday, amid the economic slowdown. This should not surprise us, as China is in the midst of a cyclical slowdown. However, the move has happened when China’s PPI and CPI have just edged up to 13.5% and 1.5% from 10.7% and 0.7% respectively in November. The message to the market is clear: avoiding…