It is widely believed that China's household consumption relative to GDP is exceptionally low. However, China's consumption seems to be undercounted, especially spending on housing.

China has made significant progress in its clean energy transition, improving energy security by reducing import dependency and lowering carbon emissions. However, China is likely to miss its near-term energy and carbon intensity targets. China needs to intensify its efforts in green transition.

The PBoC carried out a flurry of policy changes after the Governor's speech in mid-June. These moves signify PBoC's desire for a nimbler open market operation, a better interest rate transmission, and a steeper yield curve. We examine the implications of these changes.

This note explains how the PBoC is managing CNY using a wide range of tools and how such interventions offer arbitrage opportunities and thus attract capital inflows. Despite these tools helping to stabilize CNY, we think the cost of intervention is too high.

China s growth in 2024Q2 was disappointing as housing woes continue to weigh on the economy. The execution of fiscal deficit has been behind schedule and monetary policy has been unresponsive. We stand ready to lower China's growth forecast if there is no effective policy response in July.

We recently brought ten IIF member institutions to Beijing and Shanghai. In the 17 meetings in three and half days, we met with policymakers, think tanks, local economists, and international institutions. This China Spotlight summarizes the takeaways from our investor trip.

Despite a record-high trade surplus, China s foreign reserves haven t increased much due to service deficits and the deterioration in non-resident capital inflows, particularly in FDI. The PBoC is diversifying its FR holding by paring back US treasuries and increasing the holding of gold.

This week s Digital Finance Developments discusses updates to China s data export control policies, new proposed policies on generative AI, and efforts to internationalize its digital currency, spotlighting the complex compliance environment for financial services.

China s housing rout is already in its third year and is still unabated. The trajectory of home prices in China appears to be similar to the average of ten major housing crises in the world. More forceful policy response is needed before the housing rout causes greater damage, especially to banks.

There has been a growing international concern that China has been manufacturing beyond its capacity to absorb. While there is some cyclical evidence to support this claim, there doesn t appear to be structural evidence, and some of the evidence is mixed.

China is striving for an economy less built with steel and cement but more powered by batteries and chips. While helping lift productivity, the advanced manufacturing sectors cannot create enough jobs. China still needs a more balanced growth with a growing service sector for job creation.

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.

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.

China's recovery lost momentum in 2Q due to both cyclical and structural woes. We expect GDP to accelerate modestly in 2H thanks to extra fiscal firepower, yet remain below the growth potential.

China's exports are facing strong headwinds of weaker global demand. We expect the whole-year exports to fall, failing to drive economic growth this year.

Oil prices have moderated, on the back of easing demand and improvements in supply. However, the range of uncertainty in the price of oil will remain significant throughout the rest of the year.

China s economy recovered robustly in 1Q at 2.2% q/q and 4.5% y/y, beating the consensus estimate. We believe the growth is still below potential and can continue expanding for the rest of the year. We revise the whole-year forecast by 0.4 pts higher to 6.0%.

Banks in China suffered from rising non-performing loan (NPL) formation in Covid years. Banks are still well-capitalized thanks to the aggressive capital raising in the past years, and business conditions are improving as the economy and loan demand recover.

The headline deficit reported by the official budget is nar-rowly defined and thus misleadingly low. We calculate and present the cash-basis consolidated deficit, which is more than twice as large. The large deficit helps to avoid a fiscal cliff like the one in 2021.

China s gigantic official foreign asset is still a black box. This note looks into the changing structures and management of China s foreign reserves and other foreign currency assets.

Many are concerned that China's reopening from the Covid lockdowns will be inflationary for the global economy. We argue that such fear is overblown.

China's inbound FDI was surprisingly strong in the past two years, despite its economic woes, precarious policies, rising production costs, travel disruptions by Covid, and friend-shoring by the US. China's economy and supply chains are more resilient than many expected.

China's expected 5.5% GDP growth in 2023 will contribute 1 point towards global growth, however, the spillover to the rest of the world through import demand will be limited. Pent-up consumption demand will be mainly in domestic services. The likely tepid fixed asset investments cap.

We expect China s GDP growth to rebound to 5%-5.5% this year, thanks to reopening and a low base last year. However, weaker exports, depressed housing, and tight local government finance are strong headwinds.

China experienced a record net portfolio outflow of $80 bln last year. The outflows were predominantly in bonds, suggesting Fed hikes were the main trigger for the outflows.

Given the weak export and housing prospect, consumption is crucial for economic recovery this year. Chinese households amassed almost 18 tln new deposits in 2022, 80% more than the previous year thanks to higher savings, fewer home purchases, and asset reallocation.

PBoC was restrained in terms of direct FX intervention amid the intense CNY depreciation this year. PBoC increasingly deploys monetary and regulatory tools to lean against the wind. These tools include required reserves on FX deposit and forward contracts, and macroprudential policies.

China's PPI is trending down and diverging from others, a sign of a weak domestic economy and deglobalization. CPI is subdued due to housing woes and lockdowns. Despite the domestic weakness, China is not exporting deflation. CPI may face moderate upward pressure late next year due to food and service prices after reopening.

RMB experienced a record pace of depreciation this year, driven by Fed hikes and interest rate arbitrage. The large current account surplus is partly offset by a record large portfolio outflow. However, the expectation of further depreciation is absent this time, unlike in 2015-16.

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.

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.

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.

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.

The direct impact of the war in Ukraine on China's economy is minor due to the relative sizes of these economies. However, the indirect impact of global consumer and investor confidence can be profound and complicated. We expect the war to reduce China's GDP growth by 0.2 points.

China’s 2022 budget seems rather tepid with a narrower fiscal deficit and flat new debt. Once the deficit in the government fund account and special transfers are considered, the consolidated fiscal deficit could reach 8.1% of GDP in 2022, lending strong support to economic recovery.

China's local government (LG) bonds have ballooned since 2018 as LGs were given ever greater bond quotas to finance deficit spending. The recent real estate slump exacerbated the risks as local governments depend heavily on land revenues. LGs are increasingly reliant on CG-LG transfers.

Russia’s invasion of Ukraine has triggered a number of severe sanctions. China, an important partner, has maintained a deliberately neutral stance. While Russia-China trade is important, financial links remain minimal. China could mitigate Russia’s loss of access to global payment systems. Furthermore, with 40% of reserves frozen, holdings in China are critical. The Bank of Russia (CBR) may need to get creative with FX interventions.

China’s economy slowed down markedly in 2H2021 due to energy shortages, tougher regulations, and a housing slump. Though policies are turning more supportive of growth, the outlook for 2022 is still highly uncertain. We expect China’s GDP to grow about 5% in 2022.

Despite having over $2 tln of net foreign assets per IIP, China runs over $100 bln investment losses a year. This China Spotlight looks at the reasons behind this. China earned a reasonable return on its foreign assets but paid a hefty cost for its foreign liabilities.

This note explains the interest rate tools at PBoC’s disposal and China’s interest rate transmission mechanism.

China’s latest census revealed an alarming deceleration in population growth. The birth rate in 2021 fell to a 72-year record low. The rapidly aging population is having a profound impact on savings, investment, and economic growth. This note looks into China's demographic challenge.

Beijing took a series of bold regulatory and economic policies in 2021. Though good for long-term sustainability, the intensity of these policies is hurting near-term growth. Better communication and some policy easing can relieve the near-term pains.

2021 was a tumultuous year for China’s economy, which was disrupted by the housing slump, energy shortage, and regulatory storms. We expect policies will be significantly more pro-growth in 2022.

Once a key driver of China's economic growth, real estate is now seen by many as a cancer of the economy. Real estate and construction together account for 14.5% of China's GDP and 20% of employment. This note examines the role of real estate, particularly housing, in China's economy.

China’s total foreign assets doubled in the past 11 years to $9 tln by mid-2021. However, considering the size of China’s GDP and the investments in its own assets in HK, China’s financial integration with the world still has a long way to go.

The result of higher oil prices is a shift in purchasing power from oil consumers to producers. Oil exporters are getting a boost to their terms of trade, leading to wider CA and fiscal surpluses. Higher energy prices will hurt several EMDEs that remain heavily dependent on petroleum imports.

China's recent electricity shortage was to some degree caused by rising power demand, but mostly due to the constraints imposed by the energy intensity target and coal supply.

The recent financial distresses among Chinese property developers are inevitable given the excessive leverage and tightening real estate policies. Careful resolution of developer debts is needed to ring fence risks while minimize moral hazards.

China's post-Covid stimulus was more restrained than after the great financial crisis (GFC) even though the Covid shock was about twice that by GFC in terms of the damage to GDP growth.

We expect consumption and manufacturing investment to pick up in 2H and support the recovery process, while the tailwinds of exports and real estate will taper off in 2H. We expect China’s GDP to grow by 5.4% and 8.6% y/y in 2H and the whole year 2021, respectively.

Domestic consumption lagged export growth in China’s post-COVID-19 recovery. This is in part because stimulus policies have targeted businesses instead of households. Surging household debt, uneven income and wealth distribution across China have tamped down consumption rates.

Since 2008, local governments (LG) have accounted for 80% of the increase in China’s government debt. Containing LG debt has become a policy priority given their limited fiscal resources and growing indebtedness.

This note investigates the forces that have contributed to China’s debt burden since 2009. We found that the lever-age ratio, defined as debt relative to GDP, was driven by different forces at different times. China’s three deleveraging attempts garnered mixed results.

China’s economic ties with Latin America grew at 19% compound annual rate over the past two decades thanks to China’s growing appetite for commodities. This note discusses the latest trade and investment developments since a detailed examination of data helps show the changing and nuanced picture.

In 2020, China’s large current account surplus was mostly offset by similarly large capital outflows. Given FDI and portfolio surpluses, capital outflows were categorized in the Other Investment account, and more specifically, as China’s external loans and deposits.

China's stock market has typically been thought of as volatile, driven by capricious retail investors. The market has improved markedly in the past few years, thanks to greater participation of domestic and global institutional investors. This note examines the growth of China's A-share market.

Foreign investors are aggressively buying Chinese bonds but are concentrated in sovereign and quasi-sovereigns. Bond inflows in 2020 were driven by index inclusion, attractive local yields, and a strengthening RMB. This note discusses the allocations of foreign investment and the type of inflows.

China’s exports were remarkably resilient in 2020, thanks to strong demand for PPE and WFH products. Export’s contribution to China’s economic growth in 2020 was greater than the headline number indicated. China’s exports are likely to be more balanced in 2021 as vaccination reopens global economy.

Tensions and disputes between the U.S. and China are likely to continue, possibly resulting in further sanctions. We focus on lessons learned from the U.S. sanctions policy towards Russia, and what those could mean for U.S. sanctions towards Hong Kong or China.

The PBoC halted its emergency easing as early as April, but continued to support the economy via fund-for-lending schemes and subsidies to bank loans. This note summarizes PBoC actions this year, with particular attention to the emergency funding schemes.

China's core CPI stayed at 0.5% in the past five consecutive months. This note investigates the drivers of China's inflation. We find that the output gap was the main culprit of disinflation in 1H due to the COVID-19 lockdown. Low oil prices and RMB appreciation further depressed domestic prices.

We expect Brent oil prices to average $47/b in 2021, but upside risks are significant. Low interest rates, a weaker US$, tighter supply, and strong demand from East Asia are boosting non-fuel commodity prices.

Currently, the digital RMB (DCEP) is designed to be strictly cash-like with no interest payment and distributed by commercial banks to minimize the risk of disintermediation. Its impacts on banks, monetary policy, and RMB globalization depend on how the design will evolve.

China’s surveyed UR provides more reliable labor data than before. Its survey method is consistent with global norms, and its coverage is reasonably comprehensive. An aging population, expanding services sector, and lower labor force participation help explain the stable unemployment rate.

The Hong Kong Autonomy Act (HKAA) stipulates potentially highly damaging sanctions. At the extreme, the U.S. may disconnect China’s banks and corporates from the U.S. Dollar. Should the conflict escalate, we worry about unintended consequences for global markets.

China’s 2060 carbon-neutral pledge is a game-changer in fighting climate change, aligning it with the EU, the UK and others.

China’s economic recovery in 2Q2020 was mainly driven by manufacturing and construction, thanks to effective pandemic control and policy support. Increases in household income and consumption are needed to make the recovery more sustainable. We expect the economy to grow by 2.2% for the whole year.

We analyze external adjustments in EM Asia following the COVID-19 shock. Cross-border flows are shifting considerably in many countries in the region. The global recession weighs on exports and weak domestic demand on imports. Other sources of FX inflows have come under significant pressure as well in H1. This includes both international tourism revenues and workers’ remittances.

The ASEAN region is now China’s largest trading partner, top tourism destination, and a key investment partner. However, the depth of these relationships vary among the individual ASEAN member states. We expect economic integration to continue in the region.

Concerned with the economy's already-high debt levels and RMB stability, the PBoC was the least dovish major central bank this year. The PBoC has begun to suspend even this moderate pandemic emergency stimulus as China’s economy recovers and as concerns about financial froth increase.

A recent PBoC survey revealed information regarding Chinese household balance sheets. Chinese households’ net worth is surprisingly large thanks to high savings rates and rising home values. The under-allocation in financial assets means poor liquidity yet great potential for diversification.

The PBoC can assist fiscal functions by providing necessary liquidity and taking on some quasi-fiscal functions through relending and policy banks. The PBoC may have to support the issuance of special central government bonds. However, the PBoC is not going to explicitly monetize fiscal deficits.

China’s rising CPI, elevated debt, and deteriorating external positions prevented strong credit stimulus in 2019. Policy impulses came mainly in the form of fiscal spending in 2018 and tax cuts in 2019. Stimulus in 2020 requires better coordination among fiscal, monetary and credit policies.

This note analyzes the fiscal tools that China has used in recent years and examines whether there is room for further fiscal expansion, especially against the backdrop of the COVID-19 pandemic.

China’s NPL ratio has been remarkably stable amid slowing economic growth, largely because many NPLs have been written off. Without these write-offs, China’s NPL ratio would be at 4.85% today instead of the actual 1.86%. More institutions and instruments have been introduced to clean up NPLs.

Hong Kong’s economy took a hit last year due to social unrest and trade tensions. Falling consumption, investment and foreign trade dragged its economy into recession. However, Hong Kong’s financial industry has proven resilient. The COVID-19 shock raises growth and other risks going forward.

Though the average capital adequacy ratio of Chinese banks is higher than the required minimum, banks still need to raise more capital for both regulatory and business reasons. Chinese policymakers have introduced new rules and instruments to help bank capitalization.

The picture of China’s overseas direct investment (ODI) is quite different from many people’s impressions.

China’s SOEs are often criticized for being inefficient and highly leveraged, but the performance gap between SOEs and privately-owned companies is smaller than many think. SOEs gained advantages during the Supply-side Reform, while private companies have lost more to the trade war.

The PBoC recently lowered interest rates for the first time in four years by 5 basis points, remaining more hawkish than its peers. The PBoC is constrained by elevated CPI, uncertain RMB & outflows, and the housing market. We expect additional slow, gradual interest rate cuts in the coming quarters.

Activity in China slowed markedly in the first half of 2018, but softened just marginally when trade tensions picked up. Policy support to credit-intensive sectors largely offset tariffs, but investment in high value-added tradable sectors suffered. Scope for more policy support remains if growth falls further.

China’s $2 trillion external liability seems large, but is manageable given China’s GDP, exports, and foreign assets. FDI loans, trade credits, and bank deposits are relatively sticky. China’s external debt overhang should be a minor concern for BoP and RMB depreciation.

CCA countries have diversified their economic linkages. The EEU and the Belt Road initiative serve as channels for Russia and China to exert influence. While Russia remains a key partner with respect to trade, labor markets and FDI in some countries, China's prominence is increasing markedly.

US tariffs should be imposing a strain on China’s balance of payments, most obviously in the current account. But the surplus is rising, in part due to quite healthy exports. Instead, trade tensions may be manifesting in capital outflows, which are above 2012 levels and half 2015/6 levels. Tariffs may be raising RMB depreciation expectations, an issue of great importance to China’s policy makers and the rest of EM.

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.

How long can investor bias toward the U.S. persist? Equity valuations have come down-but few markets look cheap EM risk aversion continues to rise, bu.

Equities were more resilient with over $7 billion in inflows-of which China was $5.8 billion; in contrast, debt saw.

Changes in China's FX regime have been associated with capital outflows, notably the 2014 band widening and the "step" devaluation in August 2015.

With this edition of the IIF Capital Flows Tracker, we introduce a new version of the EM Portfolio Flows Tracker. Our " Tracker 4.0 " provides a more.

Sharp drop in global trade volumes, driven mainly by emerging markets' Warning bell on global stocks as defensives outperform cyclicals' FX-denominate.

The recent RMB devaluation is raising fears a currency war is imminent. RMB declines have undone strength from early 2018, a natural up and down. But.

Analysts weigh current growth signals against the potential impact of tariffs' Dollar strength prompts a rethink across asset prices What next for com.

Welcome back to another edition of Sticky Notes, the IIF's review of this week's events in international economics and politics. If you would like to.

The RMB had been on the sidelines of growing trade tensions, but its recent weakness is raising fears of competitive devaluation. We continue to th.

Mounting trade tensions raise risks for global equities, emerging markets Sudden stop in non-resident portfolio equity flows to China Big drop in U.S.

China posted its first current account deficit in a long time in Q1. Is the deficit due to rebalancing or other factors? The bulk of the decline refle.

Market positioning highlights optimism on U.S., Japanese equities, risks for Treasuries, EMs U.S. yield curve flattening leaves bank stocks unruffled".

Turkey hikes rates to support the lira-will this movie replay in other markets? Rise in EM local currency yields has been modest, compared to the tape.

China still enjoys strong growth momentum driven by services and advanced manufacturing. Trade tensions and deleveraging of a very indebted economy ar.

Despite U.S. fiscal expansion, the global supply of safe assets may be nearing a cyclical peak' Large U.S. banks report record net income in Q1, helpe.

We recently introduced a new activity tracker for China. That tracker displays far more swings than the official GDP data. We explore if swings in cre.

Geopolitics boosting oil prices, but this s.

China's real GDP growth has been very stable since 2015, unlike its main trading partners, which continue to see normal variability. A new activity.

Trade wars could dent profit margins, challenging expectations of strong earnings growth European investors likely to keep calm and carry on after dov.

China's foreign exchange reserve recovered in 2017, after a decline of $1 trillion over two and half years. This was entirely due to the reversal of f.

At this time last year we warned that political uncertainty had risen to remarkably high levels. Now the questions may have changed, but risks remain.

Bottom-up analysis shows that CPI in 2018 will be moderately higher, "¦ "¦driven by food, residence and probably also services.' Thus, we think the ch.

Both on- and off-balance sheet Chinese banking sector assets ballooned in the past decade. However, many drivers behind the rapid asset growth seem to.

China's state-owned companies are suffering from high leverage and low return, "¦ "¦ partly due to their high concentration in upstream heavy industri.

We expect China's CPI to be slightly higher, yet still contained in 2018, "¦ "¦ thanks to limited pass-through from PPI and slower growth of the money.

China's corporate debt relative to GDP is the highest both historically and among the major economies. However, Chinese companies' leverage, measured.

Non-resident portfolio inflows to emerging markets dipped slightly to $13.6 billion in October, with a jump in equity inflows offsetting a slowdown in.

The real-term FAI growth by non-SOE companies fell from 40% in 2011 to only about 2% in the past year. There are both benign and worrisome reasons beh.

Sizing up the earnings turnaround' Pricing policy uncertainty' Bank earnings offer clues on cyclical recovery Frontier markets see a continued surge i.

This note discusses the structures of China's external and foreign exchange balance sheet.' The liability-side of the external and FX balance sheet is.

Download PDF (227.66 KB) II.

Markets hunt down divergence trades Equity flows chase growth standouts Softer USD-lift for corporate earnings? U.S. debt ceiling-kicking the crisis d.

We showcase the importance of Global Value Chains (GVCs) for world trade. Using granular trade data, we determine that US trade balance with the rest.

We update our model for the USD/CNY fix, concluding that USD/CNY could still fix lower for some time, given that the RMB in trade-weighted terms is st.

The striking slowdown in world trade growth over the past five years has been the subject of much research. In the first of a two-part series on trade.

2H growth will face more policy headwinds, especially on fiscal front. Expect GDP growth at 6.7% in 2H and 6.8% for 2017. These f.

Markets seemed to move last week based on President Trump's July 12th statement that his Administration would impose tariffs or quotas on steel. ' As.

We expect China's growth to stay robust in 2Q, growing at 6.9% y/y and beating consensus (6.8%) again. Our regression, using the PBoC quarterly survey.

Thus, the record low M2 should not daunt the PBoC's delever.

China has experienced massive capital outflows in the past two years, this vicious circle weakened economic confidence and heightened domestic financi.

We estimate that non-resident portfolio inflows to emerging markets rose to USD21 billion in May All four EM regions saw portfolio inflows in May, wit.

In the months since the election, the ability of Dollar moves to explain USD/CNY fixings is down sharply.' We interpret this regime change as a de fa.

China's total debt (ex-financials) now tops 265% of GDP, marking a sharp rise from 140% in 2008. Heavily indebted non-financial corporates in China ar.

We estimate a simple model that examines the role that Dollar direction plays in the fixing mechanism. Prior to Nov. 8, the fixing displayed asymmetry.

There is a perception in the market that capital controls have helped balance China's capital flows. But experts that we talked to in Beijing were les.

We estimate that non-resident portfolio inflows to emerging markets were solid at USD21 billion in April All four EM regions saw portfolio inflows in.

The sharp decline in the current account surplus,' which fell over $100 billion last year, was driven by a drop in the goods balance, not services.' W.

We estimate that non-resident portfolio inflows to emerging markets rose to USD30 billion in March - the highest monthly inflow since January 2015. Al.

Download PDF (578.93 KB) IIF Authors Kristen Silverb.

Looking on the bright side Trump vs. WTO China-green shoots in spring India-GDP surprises, but revision likely' Colombia easing set to continue.

Is the reflation trade coming back? China - capital outflows remain large India - RBI surprises, keeping rates on hold MENA - short-term pain, long-te.

We estimate that non-resident portfolio flows to emerging markets rose to USD12.3 billion in January EM Asia, LatAm, and EM Europe saw modest portfoli.

China Economic Update The Great Moderation China GDP is less export and industrial driven, yet still too dependent on financials and homes Growth sta.

Markets reassess the Trump trade US-a surge in animal spirits China-no deleveraging in 2016 Brazil-monetary easing accelerates Turkey-tightening liqui.

1.' What next for the dollar? ' ' Investors closed out 2016 with fairly firm convictions about where markets were headed: the dollar and mature equi.

December portfolio outflows cap the weakest year since the crisis : Non-resident portfolio outflows from emerging markets are estimated to have been $.

The December 2016 edition of the IIF Global Economic Chartbook summarizes our current views on the global economy, drawing on our latest' Global Econo.

When visiting China last week, we found more confidence that recent economic growth had stabilized, but also greater uncertainty about 2017 given elev.

1.' Markets brace for higher bond yields, stronger USD: As investors digest the implications of the Fed's rather hawkish hike (see below), they see l.

Portfolio outflows largest since "taper tantrum": Non-resident portfolio outflows from EMs are estimated to have been a hefty $24.2 billion in Novembe.

State-Owned Enterprises (SOEs) remain critical to China's economy. They dominate heavy manufacturing, financial services, utilities, telecom and defen.

As part of ongoing efforts to enhance our monitoring of capital flows to emerging markets, last month we introduced new country-level indicators to tr.

The September 2016 edition of the IIF Global Economic Chartbook summarizes our current views on the global economy, drawing on our latest Global Econo.

As part of ongoing efforts to enhance our monitoring of capital flows to emerging markets, we are introducing new country-level indicators to track ne.

Policymakers are focused on avoiding near-term economic volatility in the run-up to the leadership transition in October 2017, but restructuring and s.

G20/B20 Summits have basically been thought of as talking shops and photo ops, with few concrete impacts on the world economy--except perhaps for the.

China's economy has generally receded from the headlines in recent months, and the sense from our meetings in Beijing this week was that this period o.

After a sharp downturn, the relaxation of administrative regulations and monetary easing progressively lifted the real estate market from early 2015,.

China-growth stabilizing, for now Turkey-political risk weighs on the economy Global fund flows-demand for safe havens and yield 1. Markets take a.

China's foreign exchange reserves increased by $13.4 billion to more than $3.2 trillion in' June, driven mainly by PBOC FX purchases. Exchange rate fl.

Europe's banks under pressure China-RMB's post-Brexit weakness 1.' Nervous markets, record low bond yields: Post-Brexit markets are venturing furt.

1.' Markets betting on Bremain: ' With the momentum of poll results shifting back towards Bremain, the markets seem to have decided that ther.

Banks are under pressure to reform conventional business models with rising non-performing loans and slowing profit growth. Strong competition for dep.

*Rising tide floats all boats-but for how long? *EM flows surge after dovish ECB, weak payrolls *Global Economic Monitor-still looking for lift *China.

The Chinese bond market has grown quickly and is expected to deepen further and become increasingly diversified. The recent opening of the bond market.

Renewed enthusiasm for risk assets' Fed leans cautious EM corporates shift toward more local currency borrowing China-weak activity points towards mor.

Asian economic growth has slowed markedly, but even more worrisome is the collapse in Asian trade. Our analysis suggests the changes depressing Asian.

1. It gets worse: This week has seen a surge in risk aversion. Rising concerns have been reflected in a further sh.

Our ma.

Stock price slump brings valuations closer to fundamentals No respite for emerging market capital flows Dovish ECB hints at March move China-growth mo.

Net capital outflows from emerging markets in 2015 were even larger than we previously thought. The bulk of these outflows relate to China, driven in.

Markets reassess 2016 prospects Spotlight on FX pegs Renewed oil price slump clouds outlook for producers EM Growth Tracker shows small rebound in Dec.

Chinese markets have had a rough start to the year, triggered by further' disappointing business sentiment reports and sustained uncertainty about gov.

1.' Markets fasten seatbelts: ' The relative calm that prevailed just after Fed liftoff has abruptly dissipated as China's market t.

Will the Force be with the markets? Fed achieves smooth liftoff High-yield sector-blinking first? China-a policy induced pick-up Argentina-bold steps.

With China's Fifth Plenum in focus this week, a key topic is promoting the international use of the renminbi. Internationalization has surged in recen.

The official rhetoric is that the easing cycle will remain gradual and cautious. We think the easing will be bold and broad-based. The official rhetor.

A rapidly slowing economy has prompted the government to reinforce policy easing using monetary, fiscal and administrative measures. Further broad-bas.

2015 has not started as well as hoped. Activity data have disappointed in Q1 and business confidence has deteriorated. The IIF again revised down its.

China-Growth Momentum Remains Tepid Oil boon fuels EM monetary easing Ukraine-looking for more help iif_we.

Russia: a perfect storm China: Looking Towards 2015 Greece-Electoral Jitters.

Equity markets assess relative growth prospects Global outlook - looking for upside China - mixed signals Korea -' BOK stands pat despite yen concerns.

The global economy seemed to be losing traction until recently, but the latest data paint a brighter picture: business sentiment picked up in October,.

The macro data flow over the summer months ranged from largely positive news in the U.S. and China to negative surprises in the Euro Area and a number.

Growing market fears that slowing economic growth amidst abundant liquidity presents a threat to financial stability and risks triggering a hard landi.

The economic slowdown, restrictions on IPOs and tougher regulations have curbed private equity activity. While the recent downswing will run its cours.

The reinstatement of the ambitious railway investment program in mid-2012 after the crash of a high-speed passenger train and the resolution of public.

The five-fold increase in the size of the domestic bond market during the past decade underscores the enormous potential for the capital market, but f.

Fiscal measures boosting public infrastructure investment, an easing in monetary policy and an upturn in exports helped stabilize growth during 2012.