Entries for 'China'

The PBoC's monetary easing is not straightforward as it works on both the pricing and quantity side with numerous policy tools. While overly cautious on the rate cuts, the PBoC's easing on the quantity side has been more aggressive than most realize. More PBoC easing is needed in 2024.

China's announced headline fiscal deficit of 3.0% of GDP is only the deficit of a narrow fiscal account. The consolidated fiscal deficit in 2024 can be as high as 8.2% of GDP, higher than last year's actual fiscal deficit of 7.0% of GDP.

China today bears uncanny similarities to 1990s' Japan in terms of demographics, housing correction, and debt overhang. On the other hand, there are also differences and the fate is not yet written. This note compares China's economy today with Japan's around 1990.

Despite the decent real GDP growth of 5.2% in 2023, Chinese investors and consumers are still gloomy. This is because deflation is hurting household incomes, corporate earnings, investor returns, and government taxes, which are all in nominal terms.

We believe Beijing still has the policy capacity to push China’s economy towards its growth potential. Though maintaining our above-consensus forecast for 2024 growth at 5.0%, we also caution the downside risk if the demand-side stimulus is inadequate.

China's shadow banks, especially the trust companies, are hurt badly by the deflationary economy and housing recession. The financial risk would be much greater if the regulators had not tightened the shadow bank regulations.

Chinese banks are facing mounting challenges amid the below-potential growth. The risks posed by the housing and local government sectors are not systemic. However, the deflation and falling lending rates are hurting banks badly.

China’s export machine remains competitive, judging from its stable market share, rising product sophistication, and market diversification. Suffering from overcapacity and anemic domestic demand, Chinese producers are lowering export prices and exporting deflation.

China's local government debts have long been on people's worry list due to their rapid growth in size and opacity in structure. In this piece, we illustrate the size of the LG debt problem and discuss Beijing's attempts to defuse the bomb of the LG debt.

We recently led an investor trip to China where people wanted to kick the tires on the ground. This piece summarizes some of the takeaways.

We take stock of our China view as Golden Week approaches. Markets are bearish on China and – so far – the bears have been right, … with data on dom...

China faces many structural challenges similar to Japan's during its 'lost decades'. However, we think China is facing income stagnation instead of a balance sheet recession like Japan in the 1990s.

Weak China data have morphed into expectations for RMB devaluation. Such expectations run counter to China’s recent management of the RMB, … where d...