https://www.scmp.com/rss/328363/feed Hao Zhou currently serves as a senior economist (emerging markets) with Commerzbank. He covers North Asia economic and markets research. en https://assets.i-scmp.com/static/img/icons/scmp-meta-1200x630.png https://www.scmp.com Since the Chinese authorities vowed to stabilise the economy at the central economic work conference, overall economic policy has shifted to easing mode. In the real estate market, many supportive measures reportedly have been rolled out. Have these measures effectively helped the property market so far? Unfortunately, according to the latest data, the answer is probably “not yet”. Let’s look at several different indicators to gauge the temperature of China’s housing market. First, new home... https://www.scmp.com/comment/opinion/article/3168706/what-chinas-grim-property-market-prospects-mean-economy?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3168706/what-chinas-grim-property-market-prospects-mean-economy?utm_source=rss_feed Tue, 01 Mar 2022 08:30:20 +0000 Since December, the Chinese central bank has introduced a slew of policy-easing measures. Following a cut to the reserve requirement ratio in early December, the People’s Bank of China (PBOC) twice lowered the one-year loan prime rate, the benchmark lending rate, in December and January respectively. However, there has been little positive response from the stock market to the monetary policy easing; in the year to date, the benchmark CSI 300 index has lost more than 7 per cent. Such weak market... https://www.scmp.com/comment/opinion/article/3167068/will-chinas-latest-monetary-policy-easing-reinvigorate-economy?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3167068/will-chinas-latest-monetary-policy-easing-reinvigorate-economy?utm_source=rss_feed Wed, 16 Feb 2022 19:30:20 +0000 In the last month of 2021, China’s central bank first unexpectedly cut the reserve requirement for deposits and then lowered the benchmark lending rate, which again fuelled speculation that massive easing was imminent. While this may sound reasonable, given the economic headwinds facing the economy, investors should also be aware that there is limited room for easing in China, which means that aggressive easing is probably not on the cards in the coming year. Despite continued data weakness,... https://www.scmp.com/comment/opinion/article/3161964/despite-rate-cuts-aggressive-chinese-monetary-policy-easing-not?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3161964/despite-rate-cuts-aggressive-chinese-monetary-policy-easing-not?utm_source=rss_feed Tue, 04 Jan 2022 22:45:08 +0000 In a meeting hosted by the People’s Bank of China, Chinese financial regulators’ warning against so-called speculation in the foreign exchange market has attracted much attention. Yet the Chinese currency has been quite steady this year, with the US dollar-to-yuan exchange rate mainly keeping within a narrow range of 6.3-6.4. Compared to many other emerging market currencies, such as the Turkish lira that recently hit record lows, the Chinese currency looks much more resilient. So why, despite a... https://www.scmp.com/comment/opinion/article/3157916/why-china-warning-yuan-speculation-when-currency-looks-so-stable?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3157916/why-china-warning-yuan-speculation-when-currency-looks-so-stable?utm_source=rss_feed Wed, 01 Dec 2021 14:00:20 +0000 While China’s property sector is already on a downward trend, plans to expand the property tax will probably only add to the housing market’s woes. The market is wondering why Beijing is sticking to its property tightening amid intensifying economic headwinds and, more importantly, whether further deterioration in the property market will endanger financial stability. There have been rumours about a new round of property tax pilot programmes for some time now. President Xi Jinping’s essay in... https://www.scmp.com/comment/opinion/article/3154473/why-beijing-will-endure-property-taxs-drag-housing-market?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3154473/why-beijing-will-endure-property-taxs-drag-housing-market?utm_source=rss_feed Tue, 02 Nov 2021 20:30:17 +0000 The widely spreading energy crisis in China is likely to extend to winter, and it has already affected many people’s daily lives and hobbled the manufacturing sector. Obviously, this is a puzzling situation: why is there an energy crunch amid an economic slowdown? In fact, the energy crisis might have been brewing for a while, and August’s power consumption data offers some clues. According to figures from the National Energy Administration, China’s electricity consumption in August grew about... https://www.scmp.com/comment/opinion/article/3151212/chinas-energy-crunch-and-high-economic-costs-going-green?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3151212/chinas-energy-crunch-and-high-economic-costs-going-green?utm_source=rss_feed Tue, 05 Oct 2021 22:45:22 +0000 Investors have two main questions regarding China. The first is, why has Beijing changed course and cracked down on certain sectors, particularly private education and tech? And, second, why does China’s economic policy remain restrained when growth faces increasingly strong headwinds? While the two may not look very related, both point to a single question: has China changed its development strategy of prioritising economic performance? A deeper question is perhaps: has the fundamental... https://www.scmp.com/comment/opinion/article/3146912/what-expect-chinas-economy-transitions-towards-common-prosperity?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3146912/what-expect-chinas-economy-transitions-towards-common-prosperity?utm_source=rss_feed Wed, 01 Sep 2021 01:15:20 +0000 With China’s economy losing steam since the second quarter of this year, there is market speculation that the central bank would cut the policy rate, i.e. the loan prime rate, soon. But the market is likely to be disappointed. Certainly, there are increasing signs that the Chinese economy faces more headwinds in the second half of this year. For instance, the official manufacturing purchasing managers’ index for July came in at 50.4, well below market consensus. Meantime, the Delta variant has... https://www.scmp.com/comment/opinion/article/3143547/why-china-unlikely-cut-interest-rates-despite-economic-headwinds?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3143547/why-china-unlikely-cut-interest-rates-despite-economic-headwinds?utm_source=rss_feed Tue, 03 Aug 2021 08:30:12 +0000 It will be interesting to see how two measures recently announced by the Ministry of Education affect China’s birth rate. The first is to create a new department, dubbed the Off-Campus Education and Training Department, tasked with overseeing the private tutoring market. The other is a notice for schools to run after-school classes that end at least half an hour after most parents finish work. While both measures are related to education, Chinese authorities have a more far-reaching target – to... https://www.scmp.com/comment/opinion/article/3139968/can-china-boost-its-birth-rate-education-and-housing-reforms?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3139968/can-china-boost-its-birth-rate-education-and-housing-reforms?utm_source=rss_feed Tue, 06 Jul 2021 14:00:12 +0000 China’s once-in-a-decade census report, released in mid-May, shows a further slowdown in the country’s population growth. Between 2010 and 2020, the population grew at an average of 0.53 per cent annually, the slowest rate in any decade since China’s first census in 1953. One of the reasons for the significant slowdown is the former one-child policy, which aimed to prevent the population from growing too fast. However, around 10 years ago, when the last census report was published, Beijing... https://www.scmp.com/comment/opinion/article/3135557/why-chinas-three-child-policy-unlikely-improve-gloomy-long-term?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3135557/why-chinas-three-child-policy-unlikely-improve-gloomy-long-term?utm_source=rss_feed Tue, 01 Jun 2021 17:30:16 +0000 Different from the “fast and furious” US Treasury market, China’s onshore bond yields have been stagnating since the fourth quarter of 2020, which has puzzled many investors. For instance, the benchmark 10-year Chinese government bond (CGB) yields have been hovering around 3.2 per cent over the past few months, with little sign of changing dynamics or direction. Naturally, investors are curious about the reasons behind the “sticky” yields in China’s “boring” bond market. First, although the... https://www.scmp.com/comment/opinion/article/3132159/dont-look-us-treasuries-rally-understand-sticky-yields-chinese?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3132159/dont-look-us-treasuries-rally-understand-sticky-yields-chinese?utm_source=rss_feed Tue, 04 May 2021 06:30:09 +0000 China’s domestic A-share market has been on a bumpy ride since the Lunar New Year holiday, with many star stocks falling like stones. The big volatility has surprised many investors as the outlook on China’s economy remains stable. In contrast, major global equity indices have been on solid footing this year with a recovery from Covid-19 expected in both the United States and the European Union. In comparison, China’s A-share market has become a clear underperformer. What are the causes of this... https://www.scmp.com/comment/opinion/article/3128384/why-chinas-share-market-such-volatile-bumpy-ride?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3128384/why-chinas-share-market-such-volatile-bumpy-ride?utm_source=rss_feed Tue, 06 Apr 2021 08:30:15 +0000 At a grand event last week in the Great Hall of the People in Beijing, ahead of the annual National People’s Congress this week, Chinese President Xi Jinping declared a “complete victory” over absolute poverty. The state media reported that close to 100 million Chinese living in rural areas had been lifted out of absolute poverty since Xi came to power in late 2012. When market investors watch the NPC, their focus is usually on the economic targets set by Beijing. From these so-called hard... https://www.scmp.com/comment/opinion/article/3123681/chinas-two-sessions-how-beijing-moving-past-gdp-targets-and-towards?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3123681/chinas-two-sessions-how-beijing-moving-past-gdp-targets-and-towards?utm_source=rss_feed Tue, 02 Mar 2021 22:45:15 +0000 As a distinguished scholar and adviser to the People’s Bank of China, Ma Jun’s comments on the Chinese economy and monetary policy are usually very eye-catching. His recent speech has caught the attention of the market, even rattled it. The question is whether China has entered a new tightening cycle. For the time being, the market still expects a gradual policy normalisation in the coming year, as the Chinese authorities have said there would be “no sudden turns” in overall policy at the... https://www.scmp.com/comment/opinion/article/3120136/why-pboc-keeping-eye-asset-price-inflation-china?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3120136/why-pboc-keeping-eye-asset-price-inflation-china?utm_source=rss_feed Tue, 02 Feb 2021 08:45:10 +0000 As a centrally planned economy, China prefers an organised, top-down approach when delivering the tone of its policies. Hence, to gauge the policy direction in the world’s second-biggest economy, the market tends to pay special attention to a few high-level policy meetings which are normally scheduled at the end of the year. Among these meetings, the Central Economic Work Conference is widely seen as the most important event for China watchers. The 2020 session confirmed a general policy shift,... https://www.scmp.com/comment/opinion/article/3116318/chinas-antitrust-crusade-against-tech-sector-signals-new-policy?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3116318/chinas-antitrust-crusade-against-tech-sector-signals-new-policy?utm_source=rss_feed Mon, 04 Jan 2021 14:00:20 +0000 With China’s economic recovery gaining more traction, the market has started to speculate that the central bank will raise interest rates next year. This expectation is already reflected in the interest rates derivatives market where we can see a steepening curve. Typically, this kind of steepening suggests that a tightening cycle is under way. Given that an interest rate rise is a typical way to tighten monetary policy, how likely is it that the People’s Bank of China will raise interest rates... https://www.scmp.com/comment/opinion/article/3111953/why-peoples-bank-china-unlikely-raise-interest-rates-next-year?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3111953/why-peoples-bank-china-unlikely-raise-interest-rates-next-year?utm_source=rss_feed Tue, 01 Dec 2020 19:30:11 +0000 As a centrally planned economy, China has followed a carefully calibrated long-term strategy and made significant breakthroughs in the global system. Therefore, its new five-year plan has attracted much attention. The Communist Party concluded the fifth plenum of the 19th Central Committee last week and unveiled the key components of the 14th five-year plan. As the first detailed strategic road map under the new “dual circulation” strategy, it provides a policy framework to analyse the Chinese... https://www.scmp.com/comment/opinion/article/3108193/how-coronavirus-and-us-china-conflict-are-driving-beijings-domestic?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3108193/how-coronavirus-and-us-china-conflict-are-driving-beijings-domestic?utm_source=rss_feed Tue, 03 Nov 2020 19:30:16 +0000 The Chinese Communist Party’s next plenum will be held at the end of October, at which the authorities are likely to roll out details of the 14th five-year plan (2021-2025). Given that Beijing still prefers this top-down approach, the plan is critical for China watchers to gauge the medium-term outlook for the country amid a challenging geopolitical landscape. The market will pay particular attention to two areas. The first is whether China will set a numeric growth target for the next five... https://www.scmp.com/comment/opinion/article/3104316/chinas-new-economic-dual-circulation-strategy-may-not-just-be?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3104316/chinas-new-economic-dual-circulation-strategy-may-not-just-be?utm_source=rss_feed Tue, 06 Oct 2020 19:30:13 +0000 On August 20, a meeting between Chinese regulators and property developers was held in Beijing. While there is little concrete information in the statement later issued by the Ministry of Housing and Urban-Rural Development and the People’s Bank of China, the meeting still attracted much attention as it was reported that the Chinese authorities has set “three red lines”. Specifically, the measures aim to control the scale of property developers’ debt. The red lines are: a 70 per cent upper limit... https://www.scmp.com/comment/opinion/article/3099667/why-china-asking-banks-sacrifice-profits-and-tightening-property?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3099667/why-china-asking-banks-sacrifice-profits-and-tightening-property?utm_source=rss_feed Tue, 01 Sep 2020 17:30:16 +0000 When Chinese Vice-Premier Liu He first talked about the concept of “dual circulation” in his keynote speech at the Lujiazui Forum in mid-June, few had any idea what he was referring to. “A new dual-cycle pattern, which is dominated by the domestic economic cycle and facilitated by the cycle between China and overseas countries, is taking shape,” Liu said. Last week, as China’s top decision-making body, the Politburo, wrapped up the country’s half-year economic review and laid out the blueprint... https://www.scmp.com/comment/opinion/article/3095842/what-chinas-pivot-towards-economic-self-sufficiency-means?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3095842/what-chinas-pivot-towards-economic-self-sufficiency-means?utm_source=rss_feed Tue, 04 Aug 2020 14:00:13 +0000 The coronavirus resurgence and subsequent partial lockdown in Beijing has clearly brought further uncertainties to China’s growth outlook. However, there are new dynamics this time, which might help us better figure out Covid-19’s influence on society and the economy in the future. First, Beijing’s subway passenger data offers a sense of the impact of the virus and lockdown. Since Beijing reported the first of a new wave of local cases on June 11, its subway passenger volume has experienced a... https://www.scmp.com/comment/opinion/article/3091029/beijing-shows-how-coronavirus-impact-economy-can-be-contained?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3091029/beijing-shows-how-coronavirus-impact-economy-can-be-contained?utm_source=rss_feed Tue, 30 Jun 2020 22:00:08 +0000 The press conference that follows the closing session of the National People’s Congress every year is show time for the Chinese premier. Unlike his predecessor, Wen Jiabao, who had a penchant for classical Chinese poetry, Li Keqiang favours a simple, unadorned style. But I believe that many were impressed by Li’s press conference wrapping up the NPC meeting on May 28, when he took a question about China’s policy orientation. “We have been saying that we won’t flood the market” with excessive... https://www.scmp.com/comment/opinion/article/3087108/chinas-coronavirus-stimulus-geared-towards-economic-survival-no?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3087108/chinas-coronavirus-stimulus-geared-towards-economic-survival-no?utm_source=rss_feed Tue, 02 Jun 2020 09:00:08 +0000 How will the Covid-19 pandemic affect the world’s economies? Given that China was the first country to impose stringent lockdown measures, and also the first to lift them, an examination of China’s data could help us understand the impact of the coronavirus if one takes a sectoral approach. After all, the service sector seems to be hit harder and for longer. Unfortunately, the sector is in for a slow and fragile recovery. First, let’s take a look at China’s first-quarter gross domestic product... https://www.scmp.com/comment/opinion/article/3082866/how-soon-will-economies-recover-coronavirus-pandemic-look-china?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3082866/how-soon-will-economies-recover-coronavirus-pandemic-look-china?utm_source=rss_feed Wed, 06 May 2020 01:30:09 +0000 China has been moving quickly to reboot its economy, which is now more or less back on track. For example, coal consumption has almost returned to normal levels and the volume of traffic in large cities also climbed close to pre-epidemic levels in March. Food prices have fallen to the pre-epidemic range, suggesting that both supply and logistics have bounced back. Rising food prices had pushed the consumer price index to above 5 per cent in January and February, somewhat constraining room for... https://www.scmp.com/comment/opinion/article/3077675/chinas-coronavirus-driven-supply-shock-has-eased-it-bracing-drop?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3077675/chinas-coronavirus-driven-supply-shock-has-eased-it-bracing-drop?utm_source=rss_feed Wed, 01 Apr 2020 04:00:05 +0000 When China’s central bank announced last August that the loan prime rate would become the new benchmark for bank lending, the market regarded it as a milestone move towards full liberalisation of interest rates, which would allow commercial banks to price deposits according to their discretion and risk appetites. As such, it seemed that official deposit rates – including the benchmark one-year deposit rate – would soon disappear from China’s banking industry. In fact, the People’s Bank of China... https://www.scmp.com/comment/opinion/article/3064812/chinas-mulling-surprise-deposit-rate-cut-suggests-need-shore?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3064812/chinas-mulling-surprise-deposit-rate-cut-suggests-need-shore?utm_source=rss_feed Thu, 05 Mar 2020 13:00:16 +0000 Over the past decade, while China’s traditional sectors have undergone a cycle of re-leveraging and deleveraging, domestic consumption has remained a stellar point of the economy. This is not only reflected in the skyrocketing sales on Singles’ Day but also indicates the direction that China can take in transforming its economy. If we connect the consumption story to China’s rapid urbanisation, the picture looks brighter. China’s urban population was close to 60 per cent of the total population... https://www.scmp.com/comment/opinion/article/3043953/three-reasons-china-cannot-count-urbanisation-boost-consumption-and?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3043953/three-reasons-china-cannot-count-urbanisation-boost-consumption-and?utm_source=rss_feed Tue, 31 Dec 2019 07:00:09 +0000 While the cancellation of the Apec summit in Chile last month was a disappointment, it was not completely bad news for the market as it actually gives China and the US more time and leeway to conclude their so-called “phase one” trade deal.  We are now in the last month of 2019, and it looks like a deal remains distant due to many sticking points between the two biggest economies in the world. If the Asia-Pacific Economic Corporation gathering had taken place as scheduled on November 16-17 and... https://www.scmp.com/comment/opinion/article/3040371/why-delay-us-china-interim-trade-deal-best-possible-outcome?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3040371/why-delay-us-china-interim-trade-deal-best-possible-outcome?utm_source=rss_feed Wed, 04 Dec 2019 17:00:15 +0000 When China’s economic output slowed to the critical level of 6 per cent in the third quarter of the year, policymakers – puzzlingly – seemed to attach less weight to the figure than markets expected. Also, as the Post reported recently, more than one-third of China’s provinces have so far fallen short of this year’s growth targets. Historically poorer regions took the hardest hit, official data showed. For example, the three northeastern provinces – Liaoning, Heilongjiang and Jilin – posted... https://www.scmp.com/comment/opinion/article/3036332/us-china-trade-war-likely-drag-are-beijings-economic-growth-targets?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3036332/us-china-trade-war-likely-drag-are-beijings-economic-growth-targets?utm_source=rss_feed Tue, 05 Nov 2019 17:00:08 +0000 The Communist Party holds its much-anticipated fourth plenary session of the 19th Central Committee later this month. While this piece of news has been overshadowed by the US-China trade headlines, China watchers should be aware of the importance of this meeting, where the Chinese leadership is likely to outline its new strategy for the next few years, especially on how the country will position itself as the trade war drags on. In fact, the fourth plenum has been postponed by at least a year,... https://www.scmp.com/comment/opinion/article/3030996/china-fights-win-us-trade-war-modern-factories-are-now-its-weapon?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3030996/china-fights-win-us-trade-war-modern-factories-are-now-its-weapon?utm_source=rss_feed Tue, 01 Oct 2019 17:00:07 +0000 When China’s Vice-Premier Liu He invited US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin to take a picture together in Shanghai on the evening of July 30, it was hard to image how much trade tensions would escalate within 48 hours. On August 1, US President Donald Trump tweeted that he would impose tariffs on all Chinese exports to the US, resulting in a big shock globally, including probably to Liu. The media reported that Trump made this decision in the Oval... https://www.scmp.com/comment/opinion/article/3025380/china-tightening-and-us-easing-both-show-signs-digging-long-trade?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3025380/china-tightening-and-us-easing-both-show-signs-digging-long-trade?utm_source=rss_feed Tue, 03 Sep 2019 17:00:14 +0000 A global easing cycle is on the way, and China is apparently a key reason behind the new global slowdown. There are many reasons to be bearish about China’s outlook, including the trade war, its debt pile and asset bubble concerns. However, it seems that few analysts believe China’s central bank will soon follow others in cutting its benchmark interest rates. So, why is there a big divergence between China’s monetary policy and the economic outlook? Some may argue that the People’s Bank of China... https://www.scmp.com/comment/opinion/article/3021552/chinas-slowing-economy-wont-push-it-joining-global-rate-cutting?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3021552/chinas-slowing-economy-wont-push-it-joining-global-rate-cutting?utm_source=rss_feed Tue, 06 Aug 2019 06:00:07 +0000 The global bond market has enjoyed a decent rally since the start of the year, with US 10-year Treasury yields even dropping below the 2 per cent threshold last week, as the market sees that the Federal Reserve is about to cut interest rates aggressively to counter economic headwinds. However, Chinese bonds have failed to join the rally; benchmark 10-year government bond yields have barely moved. As a result, the yield spread between the Chinese and US in 10-year bonds has widened to more than... https://www.scmp.com/comment/opinion/article/3016891/how-baoshang-bank-takeover-triggered-confidence-crisis-small?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3016891/how-baoshang-bank-takeover-triggered-confidence-crisis-small?utm_source=rss_feed Tue, 02 Jul 2019 07:27:49 +0000 Will China weaponise or weaken its currency as a retaliatory measure amid rising trade tensions with the United States? And will Beijing offload a trillion dollars in US Treasury holdings? These are some of the most frequently asked questions of late, given that trade talks seem to be deadlocked. Both the US and China have seemingly taken a tougher stance and are now preparing for a prolonged dispute.  Certainly, both options are available and probably feasible for the Chinese government, since... https://www.scmp.com/comment/insight-opinion/article/3012046/trade-war-us-china-should-fight-smart-and-weakening-yuan-or?utm_source=rss_feed https://www.scmp.com/comment/insight-opinion/article/3012046/trade-war-us-china-should-fight-smart-and-weakening-yuan-or?utm_source=rss_feed Tue, 28 May 2019 06:00:08 +0000 The Chinese stock market experienced a “fast and furious” month in April. The market kicked off the month on an optimistic note following the release of stellar Purchasing Manager Index figures. Many investors were hoping for another bull market, but quickly the major stock indices erased almost all the monthly gains towards the end of April. What caused this roller-coaster ride? At first glance, the pullback does not make sense: China reported quite decent gross domestic product growth and... https://www.scmp.com/comment/insight-opinion/article/3008223/chinese-stock-markets-fast-and-furious-april-was-rooted?utm_source=rss_feed https://www.scmp.com/comment/insight-opinion/article/3008223/chinese-stock-markets-fast-and-furious-april-was-rooted?utm_source=rss_feed Tue, 30 Apr 2019 17:00:07 +0000 Discussions about China’s interest rate liberalisation have been warming up since Yi Gang took over as governor of the People’s Bank of China (PBOC). This is not surprising given that Yi is a distinguished scholar, with central banking experience and expertise in monetary economics. Also, like his predecessor Zhou Xiaochuan, known as “Mr Renminbi” for leading the push for a global yuan, Yi is probably keen to make his mark on China’s monetary policy history. However, the ongoing market... https://www.scmp.com/comment/insight-opinion/article/3004235/chinas-slowing-economy-gives-its-central-bank-chance-be?utm_source=rss_feed https://www.scmp.com/comment/insight-opinion/article/3004235/chinas-slowing-economy-gives-its-central-bank-chance-be?utm_source=rss_feed Tue, 02 Apr 2019 07:00:08 +0000 How’s the Chinese economy doing? According to official data, it grew 6.6 per cent in 2018. Fourth-quarter GDP growth slowed, but not enough to indicate an economic slump. However, trade data seems to tell a different story from the GDP headline figures: imports of manufactured goods declined substantially in the second half of 2018, painting a more fragile picture of domestic demand. It’s worth bearing in mind that trade figures are more reliable as they can be cross-checked with trade... https://www.scmp.com/comment/insight-opinion/united-states/article/2188678/2-trillion-yuan-question-will-chinas-stimulus?utm_source=rss_feed https://www.scmp.com/comment/insight-opinion/united-states/article/2188678/2-trillion-yuan-question-will-chinas-stimulus?utm_source=rss_feed Tue, 05 Mar 2019 07:04:51 +0000 While the market is trying its best to guess how many cuts in the reserve ratio requirement to expect in China this year, the Chinese central bank has managed to tweak its strategy. Facing the pressure of a slowdown in the Chinese economy and dissatisfaction among corporations, especially private firms, the People’s Bank of China rolled out two new monetary policy instruments in late January.  On January 23, the Chinese central bank deployed its targeted medium-term lending facility for the... https://www.scmp.com/comment/insight-opinion/united-states/article/2185144/how-peoples-bank-china-changing-direction-and?utm_source=rss_feed https://www.scmp.com/comment/insight-opinion/united-states/article/2185144/how-peoples-bank-china-changing-direction-and?utm_source=rss_feed Wed, 06 Feb 2019 07:00:45 +0000 China’s economic momentum has slowed noticeably, as suggested by headline growth figures, sentiment indicators and activity data. Since the beginning of 2018, the People’s Bank of China has lowered the reserve requirement ratio for the major commercial banks by 250 basis points in total, clearly suggesting that an easing cycle has been initiated.  However, China intends to shore up growth without falling back on debt-fuelled stimulus in this easing cycle, as a massive package to boost growth... https://www.scmp.com/comment/insight-opinion/united-states/article/2180254/china-tax-cuts-may-work-where-its-4-trillion?utm_source=rss_feed https://www.scmp.com/comment/insight-opinion/united-states/article/2180254/china-tax-cuts-may-work-where-its-4-trillion?utm_source=rss_feed Tue, 01 Jan 2019 19:00:30 +0000 Chinese President Xi Jinping may have eaten the most expensive steak in his life at the working dinner with US President Donald Trump in Buenos Aires. In this much-anticipated meeting, a 90-day trade truce was declared. According to the statement issued by the White House, China has agreed to purchase a “very substantial” amount of US goods to reduce the bilateral trade imbalance, and agricultural goods are at the top of the list. This is an obvious breakthrough in trade negotiations, offering... https://www.scmp.com/business/article/2176473/how-much-will-xis-g20-steak-dinner-trump-cost-china-possibly-us300-billion?utm_source=rss_feed https://www.scmp.com/business/article/2176473/how-much-will-xis-g20-steak-dinner-trump-cost-china-possibly-us300-billion?utm_source=rss_feed Wed, 05 Dec 2018 17:00:51 +0000 US President Donald Trump must have decided that this week’s midterm elections needed a jolt of good news – hence his tweet last Thursday that he had a “very good conversation” on trade with Chinese President Xi Jinping. In the meantime, China is also eager to de-escalate the trade conflict with the United States as its economy seems to cool further. China is hosting its first International Import Expo in Shanghai this week, a demonstration of its willingness to shrink its trade surplus by... https://www.scmp.com/comment/insight-opinion/united-states/article/2171902/how-trump-xi-phone-call-and-rumours-trade-deal?utm_source=rss_feed https://www.scmp.com/comment/insight-opinion/united-states/article/2171902/how-trump-xi-phone-call-and-rumours-trade-deal?utm_source=rss_feed Tue, 06 Nov 2018 08:15:15 +0000 What a difference a year makes. Around this time last year, one of the most frequently asked questions about China’s economy was: is it in a new boom cycle? The optimism about the Chinese economy was largely driven by the consumption story. By this logic, rising consumption would not only help China sail through structural challenges, but also rebalance the global economy and boost the financial markets. However, the market has to admit that it might have been too naive and underestimated the... https://www.scmp.com/comment/insight-opinion/united-states/article/2170992/china-cant-be-passive-and-shortsighted-if-it?utm_source=rss_feed https://www.scmp.com/comment/insight-opinion/united-states/article/2170992/china-cant-be-passive-and-shortsighted-if-it?utm_source=rss_feed Thu, 01 Nov 2018 02:00:15 +0000 No man ever steps in the same river twice, but the People’s Bank of China (PBOC) has. It recently confirmed that the so-called counter-cyclical factor mechanism has been reintroduced to ease the depreciation pressure on the yuan. This is another move by the Chinese authorities to stabilise the currency, as the yuan has fallen sharply since trade tensions started to escalate. Yuan exchange rates received a big boost on the news. Indeed, the market had already sensed some behavioural change in the... https://www.scmp.com/comment/insight-opinion/united-states/article/2162465/why-yuan-depreciation-shouldnt-be-concern?utm_source=rss_feed https://www.scmp.com/comment/insight-opinion/united-states/article/2162465/why-yuan-depreciation-shouldnt-be-concern?utm_source=rss_feed Mon, 03 Sep 2018 20:00:15 +0000 Things look familiar again. Due to financial deleveraging policies over the past two years, China’s economic growth has slowed significantly, although official GDP numbers still look decent. Indeed, the markets have flagged investors’ concerns about the economy. For instance, the benchmark CSI 300 index lost 12.7 per cent in the first seven months of 2018. Ten-year government bond yields have experienced a free fall since the beginning of the year, which typically means risk aversion is... https://www.scmp.com/comment/insight-opinion/hong-kong/article/2160860/china-targeting-right-enemy-its-war-debt?utm_source=rss_feed https://www.scmp.com/comment/insight-opinion/hong-kong/article/2160860/china-targeting-right-enemy-its-war-debt?utm_source=rss_feed Thu, 23 Aug 2018 05:15:30 +0000