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COUNTRY INSIGHTS

Caught between two worlds
CHINA ADVISORY · Report · 12 May 2022

It’s becoming increasingly clear that China’s leadership has no clear path out of the problems of handling the latest Covid wave, the impact on supply chains and domestic activity, the prolonged problems with the property industry, and the slowing economy. There also is significant debate about e...

Pandemic statistics update: policy panic
CHINA ADVISORY · Report · 09 May 2022

China is struggling to come up with a reasonable policy to tackle the twin problems of Covid and a slowing economy. Reports suggest there is a serious policy conflict at the upper reaches of the State Council. This is likely to end badly rather than well. However, the PRC Standing Committee conti...

Pandemic statistics update
CHINA ADVISORY · Report · 27 Apr 2022

We look at cinema openings nationally, traffic in Shanghai, and political opposition to Covid measures in Shanghai. We see some improvement in the film industry and signs that traffic is slowly building up. We also see that a health issue such as Covid is providing an avenue for widespread commen...

A quick note on China's macro data
CHINA ADVISORY · Report · 20 Apr 2022

China has issued a flurry of policies designed to rejuvenate the economy – a 25-basis-point RRR cut last week, 23 bank-focused policies Monday…What is unusual is how restrained the reaction has been. Between lockdowns, Covid, the Ukraine situation, continued friction with the U.S, and the tech cr...

Shanghai lockdown
CHINA ADVISORY · Report · 13 Apr 2022

High frequency cinema opening data suggests a flattening out of the impact of Covid on the country, although it’s too early to tell. Meanwhile, the problems with the Shanghai lockdown highlight the central government’s experimentation with focused lockdowns but also raise questions about Beijing’...

The Evergrande bank heist
CHINA ADVISORY · Report · 31 Mar 2022

Chinese banks took control of $2 billion of Evergrande cash held by Evergrande Property Services, a unit of Evergrande. Surprisingly, the company expressed confusion about the transfer and said it is “investigating” how the banks claimed the funds. What does this tell us about China’s economy as ...

Economic dissent at the top
CHINA ADVISORY · Report · 17 Mar 2022

The volatile Chinese equity markets forced economics czar Liu He to make a statement quieting the markets. That has led to expectations of a new stimulus, including state promotion of equities (the “national team”). Although Xi Jinping dislikes volatility, whatever stimulus measures that are adop...

China’s Russian loans
CHINA ADVISORY · Report · 17 Mar 2022

China is now considered Russia’s most important partner due to their close strategic, political, and economic relationship. How do we value this relationship? One way is to examine the loans China has made to Russia over the past decade. Using the Aiddata loan database from William and Mary colle...

China’s proxy stimulus
CHINA ADVISORY · Report · 25 Feb 2022 · 1 response

China is avoiding a direct fiscal or monetary stimulus in favor of small-scale stimulus through proxies. In fact, Beijing is purposely withdrawing support for the property sector to avoid inflating the bubble. This may be inadequate to stimulate the economy to the degree that many investors are e...

China’s shadow stimulus
CHINA ADVISORY · Report · 10 Feb 2022

Many analysts are predicting a large economic stimulus in 2022, in the form of lower interest rates, further cuts in the reserve requirement ratio (RRR), an expansion of monetary policy, or other means. However, Beijing is so far holding off on a major stimulus program. There is a consistent worr...

Squeezing the provinces
CHINA ADVISORY · Report · 21 Jan 2022

The Evergrande default and the property crackdown show a new willingness by Beijing to force deleveraging even as the economy slows in order to avoid a financial crisis. The main solution to the Evergrande default is to force debt workouts onto the backs of provincial governments. This is part of...

A strong RMB into 2022
CHINA ADVISORY · Report · 07 Jan 2022

China’s yuan has strengthened steadily for much of 2021. Capital inflows remain strong, while exports have maintained relative strength. This is likely to continue in 2022. For 2022, China’s RMB policy will confront a number of challenges. First is the outlook for exports, particularly to the ...

Will Beijing turn the taps back on?
CHINA ADVISORY · Report · 20 Dec 2021

The Evergrande default took the market by surprise as central government support (at least until recently) was widely expected. Since then, China has issued mixed signals about its plans for handling the Evergrande crisis. On one hand, the central bank cut the Required Reserve Ratio, releasing 1 ...

Can China avoid the Japan trap?
CHINA ADVISORY · Report · 24 Nov 2021

Two concerns dominate elite politics in China. One is the collapse of the political system similar to the Soviet Union. The second is the Japanese period of economic stagnation in the 1990s. The fear of economic stagnation is behind the sharp cutbacks in the property market and the collapse of Ev...

China’s property bubble and the wealthy – who will win?
CHINA ADVISORY · Report · 02 Nov 2021

China is struggling with reducing the property bubble while maintaining adequate housing for the population along with adequate growth in the property sector. Now, there is talk of an expansion of local property taxes to replace land sales as a source of revenue. Can China restructure its revenue...

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