chinese economy

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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…

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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…

An exterior view of China Evergrande Centre in Hong Kong

Evergrande Is Not Lehman

Intermoney | A slightly higher opening (Eurostoxx futures +0.3%) after yesterday’s 2% falls in the main American and European indices, with the Ibex registering a better relative performance, buoyed by the tourism and defensive sectors. This environment of greater risk aversion and fears about economic growth also translated into additional moderation of IRRs. In the case of Europe, this was also supported by the statements from Villeroy, the governor of…

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Chinese Economy, Priorities For 2021

Morgan Stanley | With growth already at pre-Covid levels, China has announced its priorities: a gradual exit from stimulus, internalisation of the yuan and reduction of carbon emissions. These are  some of our predictions: Foreign Exchange reserves of $3,190 bn (vs $ 3,178 bn in November 2020; Headline inflation from -0.5% to 0% and a credit growth down 0.1% to 13.6%. Furthermore, we estimate that the deficit will fall to 12% of GDP, after reaching a record high of 15.4% in 2020. But still above 9.9% in 2019. 



China's one belt, one road initiative

Asian Supply Chains Recover

Fidelity | Our analysts report that activity in Asia’s extensive network of factories, ports and logistics centres is accelerating as the Chinese economy leaves the blockade behind. Dockside cranes are once again squeaking in some of Asia’s largest ports as production at Chinese factories progressively speeds up, after several weeks of coronavirus-related disruptions.