Too Early to Breathe Easy

Conditions can become much worse in China’s economy and financial markets. As a result, it is far too early to expect a rebound in China-related risk assets. Beijing’s regulatory tightening campaign appears to be intensifying rather than stopping, and the financial consequences of this year’s slowdown in credit growth and pressure on the property sector still loom. The PBOC will need to deliver far more monetary easing before confidence in stabilization or an economic rebound can build.

Posted September 9, 2021
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China’s Oil Imports Under Pressure

China’s crude oil imports have declined by 5.6% in volume terms in the first seven months of the year, unusual in an economy with GDP growing at headline rates of 12.7% y/y in 2021. But given the increasing importance of China’s independent refineries and exports of refined products, crude imports are no longer a straightforward read into trends in China’s domestic demand and economic performance. This note briefly outlines the factors behind the slowdown in crude imports so far this year. For the rest of the year, we expect a small pickup in crude imports relative to current levels, but a full-year drop compared to 2020.

Posted August 30, 2021
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Property Market Chartbook, August 2021

China’s July property data showed that weakening residential construction contributed to the broader industrial slowdown over the past several months. Starts and sales both declined in year-on-year terms, in part due to flooding and restrictions on movement necessary to control the Delta variant. Policy toward developers’ financing conditions continues tightening, which marks a qualitative difference from previous property market downturns.

Posted August 30, 2021
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