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COUNTRY INSIGHTS

Winter is coming to China
CHINA ADVISORY · Report · 02 Jan 2019

Recent data on employment and investment in fixed assets suggests a modest stimulus will lead to improvements in China’s economy. However, a closer look at local polls, along with other research, indicates that employment is much weaker than stated in the official data. Because macro data tend...

Monetary stimulus and land sales
CHINA ADVISORY · Report · 07 Dec 2018

China has witnessed a significant increase in unsuccessful land auctions in 2018. The rate for the top Tier 1 and 2 cities rose to 6.4 percent in 7M 2018 from 5.7 percent in 2017. In this report, we ask the question – what types of credit are linked to the success or failure of land auctions? And...

Rising fiscal stimulus and support for the private sector
CHINA ADVISORY · Report · 23 Nov 2018

To understand how the Chinese banking system is coping with the economic downturn, we spoke to 15 banks in 10 cities. Despite concerns about expansion of debt, our November 2018 survey of fifteen banks shows that banks are lending for infrastructure projects in a clear bid to stimulate the econo...

Does monetary policy work?
CHINA ADVISORY · Report · 16 Nov 2018

Does Chinese monetary policy work? If the central bank changes interest rates, does the market react? Or are interest rates irrelevant and only fiscal policy – direct intervention – effective? These questions are essential to understand the effectiveness of interest rate policy in China. Ultim...

China’s infrastructure model is broken
CHINA ADVISORY · Report · 09 Nov 2018

China’s economic growth in the near term will depend on further investment in infrastructure, which has been the main driver in the past. The switch to consumption will take time. Our analysis suggests there are inadequate fiscal resources to continue to generate significant growth through invest...

Monetary noise from Beijing: Little support for equities - yet
CHINA ADVISORY · Report · 26 Oct 2018

Chinese equities ended the week higher after senior Chinese officials expressed support for the markets. The comments by officials in the central bank and the central economic leadership were interpreted as indications of a support for stocks. However, the comments focused more on the fundamental...

China bank survey: The return of shadow banking
CHINA ADVISORY · Report · 19 Oct 2018

Beijing is returning to stimulus to prevent a decline of GDP at a time of the threat from the Trade War. We see this growth in lending, both on and off balance sheet, in our October bank survey. One policy that has been surprisingly effective is the increase in lending to small businesses, a key ...

China’s Belt and Road: Debt trap – for China?
CHINA ADVISORY · Report · 04 Oct 2018

I spent three days at the end of September in the city of Astana in Kazakhstan, at a conference that was part of a larger effort by Nazarbayev University to create a China Centre. Kazakhstan is feeling pressure due to its location between China and Russia and is seeking greater depth of knowledge...

China’s debt-strapped consumer
CHINA ADVISORY · Report · 14 Sep 2018

Chinese consumption has been a major contributor to China’s GDP, adding an estimated 60% to GDP growth. In addition, the government increasingly has been turning to private capital, including savings from private citizens, to pay for infrastructure and other stimulus projects through bond sales, ...

Beijing has its back to the wall
CHINA ADVISORY · Report · 03 Sep 2018

Visiting Beijing nowadays is like marching into a former war zone where the mines have not been removed. It’s not clear how many there are or where they are located but everyone is fearful they are out there somewhere. Financial regulators, foreign diplomats, corporates and private citizens are s...

China’s policy backpedaling
CHINA ADVISORY · Report · 20 Aug 2018

China’s banking regulator Saturday issued a strong notice proposing a heightened stimulus for the economy. This notice from the China Banking and Insurance Regulatory Commission (CBIRC) was unusual for several reasons: • First, it was more aggressive than previous government statements; • Secon...

China’s confused policymaking: return to relaxed monetary policy as leadership conflicts highlight the slowing economy and the trade war
CHINA ADVISORY · Report · 03 Aug 2018

China’s leadership is showing signs of strain – not just in its reaction to Washington, but in its overall economic policymaking. A series of outspoken statements has displayed a highly unusual amount of public disagreement in Beijing. This suggests both deepening conflict over economic policy, a...

China’s lithium dreams: the OPEC of lithium
CHINA ADVISORY · Report · 27 Jul 2018

Chinese companies are amassing significant stakes in the world’s lithium producers, many located in South America. We estimate that China has the potential to control 66 percent of global production and 90 percent of global lithium reserves. While current levels are below that – 37 percent and 45...

China’s Property Squeeze: Developers face a liquidity crunch
CHINA ADVISORY · Report · 13 Jul 2018

Out of all the sectors in China, property developers are suffering the most due to recent liquidity tightening policies from the central government. On one hand, traditional financing channels of bank loans, sales outstanding, private placement bonds, and offshore bond issuance have been signific...

China’s “nervous economy”: The rate cut won’t solve the problem
CHINA ADVISORY · Report · 02 Jul 2018

Three events have occurred in the past several weeks that indicate China’s increasing nervousness about the state of its economy: 1) The PBOC engineered a targeted rate cut; 2) The domestic market fell more than 20 percent from its peak, and 3) An internal document warning of a “financ...

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