May 2022 China Macro Data Recap

While headline industrial value-added surprisingly expanded by 0.7% y/y in May, most official subcomponent data continued to reveal a contracting economy. The property sector is now a significant drag on investment activity and overall economic momentum. Easing COVID restrictions will be essential to catalyze a more sustainable rebound later in the year, but any recovery will be modest in comparison to what occurred in 2020.

Posted June 21, 2022
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Political Infighting and China’s Post-Lockdown Economy

China’s economy should finally start improving as lockdowns and COVID restrictions are being lifted, and authorities are pledging new policy measures to support growth. Data should look better in the coming months, particularly in terms of industrial production. But the conflicting policy messages from top leadership, along with mixed signals from local governments, are likely to take a toll on business investment and consumer spending. The recovery from lockdowns this year will not look like 2020, as Beijing has not formally abandoned its “zero COVID” stance, and communicating a transparent, predictable, and stable policy environment will require time to rebuild policy credibility to both households and corporates.

Posted June 11, 2022
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Property Market Chartbook, May 2022

Conditions in China’s property market remain dire, with sales severely limited by lockdowns and other COVID-related restrictions. Sales are still falling by 52% y/y in May according to the 30-city data. Policy overall is becoming more supportive toward the sector, led by multiple local governments and boosted by the recent 15 bps cut to the 5-year loan prime rate (LPR). Critical areas to watch include whether or not financial institutions remain cautious in lending to developers, as well as how fast sales improve after COVID restrictions are eased.

Posted May 31, 2022
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