Household debt has fueled China's housing, consumption, and economic growth. Households' large financial and housing assets mitigate the risks of rising leverage. However, household leverage is no longer low relative to income, and can no longer be used to stimulate economic growth.
Powell reaffirms dovish stance—but if stronger U.S. data derail cuts, could a bond market selloff be on the horizon?; Catch-22: central bank accommodation intended to support growth ends up hurting the financial sector; Over 17% of the EM USD corporate bond universe (ex-financials) have credit ratings on “negative outlook”; U.S. investors have growing exposure to climate risk via their cross-border investments—especially in equities; International investors shift into Chinese RMB bonds after index inclusion—foreign holdings now at a record $284 billion
Activity in China slowed significantly in mid-2018, but has been stable since September despite tariffs. A revival in credit-intensive sectors offset tariffs, which clearly affected export volumes to the US. Scope for policy support remains if growth falters.
China currently faces headwinds to growth from both US tariffs and weaker domestic consumption. Compared with 2016, another period of soft exports and weak demand, many cyclical indicators—such as investment and retail—are weaker now, but structural indicators are more promising.
Our activity tracker slowed markedly in 2018, but has been broadly stable since September. Tariffs played a limited role in the slowdown, but are finally taking a toll on tradable sectors. Credit-intensive sectors are turning around, suggesting China’s policy stimulus still works.
The IIF released a collection of papers analyzing the state of the Chinese economy. This research coincides with the IIF’s 2019 China Roundtable, held on the margins of the IMF/World Bank Spring Meetings.
China’s imports of US goods fell sharply last year, in response to new US tariffs on Chinese goods. We attribute the decline to a retaliatory 25% tariff, but data suggest non-tariff measures were also used. China substituted certain US imports markedly, in favor of countries like Russia and Brazil.
US imports from China continue to grow despite tariffs. We examine whether this means tariffs are ineffective, creating value, volume, and price series by tariff group.
In our last edition of Sticky Notes in 2018, we look at President Xi's reform anniversary speech, Venezuela's future, NAFTA termination, oil markets, and a potential U.S. government shutdown.
Activity in China is cooling more than GDP suggests, but exports are not the main driver of the slowdown. Tariffs will eventually have an impact on the economy, that we quantify in a simple model of import demand. Growth would fall modestly in a détente scenario, but could drop by 0.5-1pp if trade tensions escalate.
In this edition of Sticky Notes, we look at oil markets ahead of the OPEC+ meeting, consumer privacy laws, U.S.-China trade talks, and end-of-year book recommendations.
In this edition of Sticky Notes, we look at takeaways from the U.S. mid-term elections, the latest U.S.-China trade talks, Brazil in the wake of a newly elected government, and U.S. soybean exports.
China's current account has traditionally registered large surpluses, but has swung into deficit this year based on data from Q1 through Q3, adding to the case that the RMB could be overvalued and needs to depreciate.
Just as in 2015, our activity tracker points to a slowdown, "¦ even though official GDP figures remain broadly stable. We compare the current slowdown
China is seeing the rise of a new kind of conglomerate, companies that occupy unprecedented roles in the world's second largest economy. With business
Non-resident portfolio flows turned negative in October with $7.6 billion in outflows (all from equities-debt saw inflows). China saw non-resident por
Markets are fixated on 7.00 as an important threshold for $/CNY, thinking a move through that level could signal competitive devaluation. But the f
Portfolio inflows to EMs increased slightly to $7.9 billion in September, due mostly to a rebound in bond inflows to $5.6 billion-offsetting the slowd
In the wake of the latest escalation in China-US trade tensions, RMB has not resumed its sharp devaluation from a few months ago. This is because t
The EM sell-off is abating as the worst FX overvaluations have shrunk, but risks related to China remain in the context of the ongoing trade war. W