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China and the Wagner coup
CHINA ADVISORY · Report · 10 Jul 2023

The Wagner coup in Russia was an awkward, embarrassing, and potentially destabilizing moment for China. China’s quiet support for Russia—while adhering to the letter of U.S. sanctions—was a balancing act that has thus far played in China’s favor. As Alexander Gabuev of the Carnegie Endowment note...

Deleveraging in China and the Japan trap
CHINA ADVISORY · Report · 13 Jun 2023

China’s economy continued to slow in April and May, with only auto sales showing strength due to low base effects in 2022. The government remains steadfast on property deleveraging although there are new rumors of further stimulus, but no firm announcement. The key issue for China’s economy is ho...

Butter versus guns in China
CHINA ADVISORY · Report · 19 May 2023

There have been enough incidents to suggest that China is softening its “wolf warrior” diplomacy toward the west, and the United States, in particular. This could have a substantial impact both on China’s foreign relations and its domestic economy. This contradicts some incidents suggesting a har...

The pressure rises for Xi Jinping
CHINA ADVISORY · Report · 02 May 2023

During the Chinese leadership’s Politburo meeting on the economy last week, the Party said it would seek to boost confidence in the private sector to return the economy to healthy growth. Louis Kuijs, chief economist for Asia Pacific at S&P Global Ratings, had forecast that officials would repeat...

China Q1 2023 GDP – structural weakness
CHINA ADVISORY · Report · 18 Apr 2023

Some quick comments about the Q1 2023 numbers: The headline numbers were stronger than expected. GDP growth was 4.5% compared with a consensus 4%. Retail sales were 10.6% compared with 7.5%. On the industrial side, one positive number that jumped out was that apparent oil demand rose 9.5%. ...

China’s softer tech regulation
CHINA ADVISORY · Report · 10 Apr 2023

Noises have been coming out of Beijing suggesting a softer tone toward the technology industry three years after the crackdown that caused share prices to plummet and companies to lose revenue. I would argue that things have changed around the margins but the underlying dynamics of Party power re...

The politics of debt after the NPC
CHINA ADVISORY · Report · 04 Apr 2023

China is struggling with high debt. The weakest portion is concentrated in the local investment companies, Local Government Financing Vehicles (LGFVs), with an estimated 50 to 60 trillion yuan. They emerged from the 2009 financial crisis and have since become the principal support for the propert...

China’s new financial centralization
CHINA ADVISORY · Report · 14 Mar 2023

China has made the most significant changes to its economic governing in several decades. It has placed power for the regulation and oversight of the financial system in the hands of a governing group in the Party. This could impact the country’s growth and financial stability. Specifically: ...

SVB and Asian banks
CHINA ADVISORY · Report · 13 Mar 2023

Generally, contagion risk from the Silicon Valley Bank situation is minimal—apart from the issue of “animal spirits…” What are the risks that could affect Asian banks? * Excessive concentration of digital assets in the banking system. However, most digital start-ups obtain funding from ventu...

The death of China sourcing
CHINA ADVISORY · Report · 07 Feb 2023

Global corporations are shifting their supply chains from China to other countries due to China’s Covid policies, rising state control, and concerns about deteriorating US-China relations. The top destinations are India and Vietnam. Much attention has been paid to the impact of the potential loss...

China’s tech crackdown is not over
CHINA ADVISORY · Report · 20 Jan 2023

Shares in China’s technology sector have risen sharply due to a perception that the central government is relaxing its regulatory restrictions on the industry. This would be a mistake. Control mechanisms are in place that will hinder the industry’s growth. There are certain key sectors – namely, ...

China’s abrupt U-turns
CHINA ADVISORY · Report · 10 Jan 2023

China has done an about-face on a number of issues that signal a sudden realization that the economy continues to slow and the country’s policies are not working. China has reversed course on domestic Covid control, the property market and its former frosty approach to diplomacy; we even witnesse...

The politics of Covid in China
CHINA ADVISORY · Report · 07 Dec 2022

China’s current management of Covid measures points to a leadership vacuum, narrow thinking, and general bad management. More broadly, as the country’s medical and economic problems mount, the shortcomings of the Xi Jinping regime’s political management style are going to become more apparent, wi...

Winners and losers in China’s property market
CHINA ADVISORY · Report · 25 Nov 2022

China has announced a package of stimulus measures for the property market. They are a compromise between full economic support and the previous harsh restrictions on the property developers. However, many of the measures are focused on demand, while consumers are reluctant to invest in an unstab...

Politics are winning over economics
CHINA ADVISORY · Report · 14 Nov 2022

Bloomberg just published a story about significant new support for China’s property market. Measures announced thus far include asking banks to extend 1 trillion yuan in emergency support for the property market by end-2022, reducing interest rates, and, according to Bloomberg reporting, develope...