Update on High-Frequency Indicators, December 2022

Cyclical activity weakened in November as COVID controls and lockdowns intensified last month, and the decline in export-driven manufacturing activity is accelerating. Credit growth should improve from October, but is still driven by public spending and infrastructure investment. Policy measures to provide additional financing to property developers are accumulating, but land sales and housing sales remain anemic, reducing the pipeline of construction for next year.

Posted December 7, 2022
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Consumer Stimulus in Focus at Central Economic Work Conference

China’s policymakers will meet in the coming weeks to map out growth targets and economic policy settings for 2023. We expect a modest rise in total government bond issuance and the formal fiscal impulse relative to this year. Central government borrowing should expand while local government borrowing is expected to decline. Spending on infrastructure will weaken, both through special revenue bonds (SRBs) and policy bank borrowing. Stimulus measures to boost household consumption and disposable incomes are the key uncertainties for economic growth next year. The PBOC will stay on a monetary easing course with conventional tools such as cuts to interest rates and banks’ reserve requirements, but the central bank will also use its balance sheet operations more aggressively.

Posted December 6, 2022
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Property Market Chartbook, November 2022

Intensifying COVID controls and lockdowns pressured property sales and land sales in October and early November. Government efforts to support the property sector accelerated as well, with promises of new credit support for developers that have not yet defaulted and new liquidity from the central bank balance sheet to complete unfinished houses. Construction momentum will continue weakening in the coming months given declining land sales and LGFVs’ much stronger recent presence within the land market.

Posted November 28, 2022
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