Entries for 'China'

China's housing rout will continue to weigh on growth, but a housing-triggered financial retrench can be avoided. Despite deteriorating asset quality and returns, Chinese banks can still make loans. The covid policy will be eased, yet gradually. Thus the sequential growth path in 2023 will be backloaded.

Weak consumption due to zero covid is weighing on growth, … as are a housing slowdown and increasing global recession risk.   We see growth of 2.6% ...

We document China’s role in external funding to frontier markets. Many received more than 0.5% of GDP annually in the mid-2010s, ... but flows slowe...

• This year's PBoC easing has created ample liquidity yet failed to stimulate loan growth. • Total credit growth is also much weaker if government bonds are excluded. • This is largely due to a lack of demand and weak confidence. • Thanks to policy guidance, medium/long-term loans to industrial

China's invincible housing market finally collapsed

Portfolio investment flow to China is a weathervane for China's financial health and global investor confidence. This China Spotlight examines the forces that drive China's net bond and equity flows.

Several EMs are seeing outflows from local-currency government bonds. China is one of them, in the context of record portfolio outflows in Q1. Our t...

China’s banking sector has expanded rapidly in the past decade, with a brief pause in 2018-19 due to deleveraging efforts. It is also competitive globally, with one of the lowest cost ratios. However, banks’ returns and interest margins have deteriorated, and credit risk remains elevated.

Shanghai’s lockdown in the spring grabbed global attention and shook investor confidence, but its impact was less severe than Wuhan’s lockdown in 2020. However, the recovery may be more difficult this time due to housing woes. We maintain our subdued outlook of 3.5% growth for 2022.

After loans were swapped into bonds by 2018, the local government's on-balance-sheet debt is straightforward. However, debt hidden in various government-backed investment entities is still a major concern. We argue that this so-called hidden debt is, at most, LG contingent liabilities.

China’s exports to Russia fell in March-May, as sanctions limited Russia’s ability to pay. China’s imports from Russia hit a record high in May, lifted by both growing volume and rising prices. We estimate that China has been paying spot price for Russian oil, but a discounted price recently.

The RMB has made marked progress in its global use, especially in cross-border investments. However, it is far behind the USD and EUR in global payments, reserves, FX trading, and trade finance. To promote the global use of RMB, China needs to further open up its financial sector.

China's State Council unveiled a plan to promote retirement savings, which is sorely needed, given inadequate public and employer pensions. This new retirement savings plan will help deepen China's financial markets and reduce volatility.

China’s FX market has grown and changed significantly. This China Spotlight looks into China’s FX market structure and how it shapes the RMB exchange rate.

China's inbound foreign direct investment was boosted by strong exports and profits in 2021. Both inbound and outbound portfolio flows shrank in...

China’s RMB has fallen sharply against the Dollar recently, … with many flagging parallels with the “step” devaluation in 2...

EM ex China outflows since the war began are not unprecedented. In contrast, outflows from China in Q1 were the largest on record, … and were bro...

Despite weak domestic demands, we expect a moderately narrower current account surplus in 2022, due to rising energy prices. Moreover, under the relatively stable headline numbers, the structure of China's current account is undergoing significant changes.