Gavekal Research
September 21, 2020
Last month President Trump issued orders that threatened massive disruption to two of China’s biggest technology companies. But the Commerce Department’s final decision on WeChat was less extreme than feared, and Trump’s blessing of a deal to avert a ban on TikTok signals a promising shift in the political calculus.
Gavekal Dragonomics
September 17, 2020
Consumer spending in China looks to be firmly on a recovering track, with Covid-19 under control and the job market improving. But the shock to household income in the first half of 2020 could still linger over spending for a while. In this piece, Wei explains what could keep consumption from quickly regaining previous growth rates.
Gavekal Research
September 16, 2020
China’s manufacturers are back to normal, and then some. Exports and manufacturing output are running faster than their pre-pandemic trend in 2019, even as global trade is contracting. In this piece, Andrew and Thomas explain what’s driving those strong numbers, and why they are actually a sign of continued weakness in the global economy.
Gavekal Dragonomics
September 8, 2020
With no new domestic cases in almost a month, Xi Jinping effectively declared victory on Tuesday in the struggle against Covid-19. In this Quick Take, Gilliam explains how China’s post-Covid landscape is shaping up for consumer services, and why Beijing is unlikely to open up internationally any time soon.
Gavekal Dragonomics
July 28, 2020
China is seeing its highest number of daily new locally transmitted Covid-19 cases since March, and government officials are rushing to contain the outbreak. In this Quick Take, Gilliam explains how China has developed a standard containment strategy to handle this and future outbreaks while minimizing economic damage.
Gavekal Dragonomics
July 1, 2020
The recovery of consumption in China is coming, but it will be an uneven one. In this piece, Thomas explains how the combination of recent negative surprises on public-health restrictions with positive surprises on jobs and income will shape the trajectories of different consumption categories, from food to autos to electronics.
Gavekal Dragonomics
August 31, 2020
Central banks usually concern themselves with the economy in the aggregate. The People’s Bank of China is now experimenting with a disaggregated approach, minimizing changes in overall policy and instead directing the flow of credit to specific sectors. In this piece, Wei considers whether this experiment can work, and where rates are headed.
Gavekal Dragonomics
August 25, 2020
Top leader Xi Jinping is now promoting a new slogan—dubbed “dual circulation”—to manage China's significant dependencies on the global economy. In this report, Gilliam explains how this does not mean the country is turning inward, but rather trying to gain more control over its long-term growth without losing its role as an international hub.
Gavekal Dragonomics
August 14, 2020
After plateauing in Q2, China’s economic activity is stepping up in Q3, powered by demand in housing, infrastructure and exports, and a lessening drag in consumer services. In this Quick Take, Thomas, Rosealea and Wei explain how these factors will assist the country as it continues down its path back to economic normalcy.
Gavekal Dragonomics
September 3, 2020
As the US government has rolled out ever more actions targeting Chinese firms, China has exercised restraint and has mostly opted not to retaliate in kind. As Dan explains, the government is taking the long view on the economy rather than pandering to nationalist outrage. But China is also developing legal tools that could be used to hurt US firms.
Gavekal Dragonomics
August 25, 2020
Top leader Xi Jinping is now promoting a new slogan—dubbed “dual circulation”—to manage China's significant dependencies on the global economy. In this report, Gilliam explains how this does not mean the country is turning inward, but rather trying to gain more control over its long-term growth without losing its role as an international hub.
Gavekal Research
August 18, 2020
The US government has passed a death sentence on Huawei. The questions now are whether it will choose to suspend that sentence, and whether China will retaliate by punishing major US companies. The likely answers, says Dan, are no and no.
Gavekal Dragonomics
August 17, 2020
China’s government is finally rolling out a plan to aid small banks, the weakest links in the nation’s financial system. But don’t call it a bailout, Xiaoxi argues in this piece: while the government will replenish RMB200bn in capital, the money will mostly support relatively solid banks. The truly troubled banks will be shuttered or acquired.
Gavekal Dragonomics
August 5, 2020
Cleaning up the messy world of wealth-management products is still a key mission in China’s financial de-risking campaign, even if the PBOC has now had to give banks another year to work on it. In this piece, Xiaoxi explains how the regulatory crackdown is pushing the risks hidden in WMPs out into the open, increasing market volatility.
Gavekal Dragonomics
July 30, 2020
The People’s Bank of China is on the way to becoming the first central bank in the world to launch a digital currency. The idea of a digital renminbi has sparked a huge amount of interest, but confusion and speculation are rampant. In this Q&A, Xiaoxi and Wei provide clear answers to some of the big questions about the digital currency.
Gavekal Dragonomics
September 11, 2020
China’s central bank and housing ministry are putting together new restrictions on the leverage of major real-estate developers by drawing three “red lines” for the firms. In this report, Rosealea explains why regulators are targeting individual developers, as well as why she feels these red lines will have limited macro impact.
Gavekal Dragonomics
July 29, 2020
After a robust recovery in construction following the Covid-19 lockdown, the big question now is whether this growth rate is sustainable. Using a rolling sum of construction starts, Rosealea posits that construction should slow only moderately in the second half, providing room for steel demand to continue growing for the rest of 2020.
Gavekal Dragonomics
July 22, 2020
The State Council recently announced a nationwide target to renovate 39,000 antiquated residential compounds in 2020, improving accommodation for 7mn total households. In this Quick Take, Rosealea explains how the target will provide space for local governments to further tighten property policy without upsetting China’s economic recovery.
Gavekal Dragonomics
September 9, 2020
Most of the US government’s efforts to hinder China’s technological progress have focused on hardware, mainly semiconductors. But software is also now a front in the US-China tech conflict. As Dan explains in this piece, those tensions could make open-source software, which is free from most legal restrictions, even more globally important.
Gavekal Dragonomics
August 21, 2020
Chinese advances in hardware technology have increased the country’s contribution to the global smartphone supply chain. In this report, Dan explains how Chinese firms have increased their value-added in both innovation and branding. Now, he suggests, the main headwinds for Chinese smartphones are no longer technological, but geopolitical.
Gavekal Research
August 4, 2020
After a whirlwind of negotiations, the US government may have succeeded in forcing the sale of TikTok’s US operations to a US company. The US earlier used national-security grounds to restrict the business of Huawei.
Gavekal Dragonomics
August 28, 2020
The first batch of 18 firms on Shenzhen’s tech-oriented ChiNext board under new registration-based IPO regulations exhibited exceptional levels of price volatility this week after their Monday debut. In this Quick Take, Thomas explains why this volatility is to be expected in Chinese equities and might even be an improvement on the status quo.
Gavekal Dragonomics
August 20, 2020
Chinese equities tapped on their ceiling this week but have been unable to break through, despite both surprisingly positive economic data and rebounding corporate earnings. In this piece, Thomas explains how increasingly adverse liquidity conditions are keeping a downward pressure on the markets which is unlikely to lift in the short term.
Gavekal Dragonomics
July 13, 2020
Chinese equities surge ahead, and officials are worried that markets are coming dangerously close to resembling the dramatic boom and bust of 2015. In this report, Thomas makes the case that the current rally has no basis in fundamentals and outlines how regulators are trying to guide equities back to reality without causing a panic.
Gavekal Dragonomics
June 19, 2020
Chinese iron ore prices have surged by 30% since May due to growing Chinese demand, shrinking Brazilian supply and increased logistics costs. In this Quick Take, Rosealea explains why prices are likely to remain elevated in the coming months but might fall precipitously in the second half of the year.
Gavekal Dragonomics
April 22, 2020
Steel prices have stabilized after falling around 10% from their peak, reflecting a relatively rapid recovery in construction activity from the Covid-19 lockdowns. In this piece, Rosealea argues that the steel market is signaling a stabilization in China’s domestic demand from improving housing sales and a boost to infrastructure spending.
Gavekal Dragonomics
February 28, 2020
Steelmakers have continued production despite a precipitous drop in demand, resulting in a short-term inventory glut. As Rosealea explains, this will lead to continued downward pressure on steel prices, at least until the construction sector recovers from the coronavirus crisis and drives demand back up to meet supply.
Gavekal Dragonomics
Simon Cartledge
June 25, 2020
Whither Hong Kong? After a year of political turmoil, uncertainty about the city’s prospects is the highest it has been in decades. This 20-page DeepChina report examines Hong Kong’s historical trajectory, and concludes the city is in long-run decline—even though it will continue to be an important financial gateway between China and the world.
Gavekal Dragonomics
April 16, 2020
China’s deep economic roots in Africa provoke alarm in the US and concern among debtor nations, especially as some costly infrastructure projects prove financially unviable. But our latest in-depth DeepChina report explains why China’s presence is generally welcome in East Africa, even as the era of huge loans and megaprojects draws to an end.
Gavekal Dragonomics
July 11, 2019
The new enthusiasm of some European countries for China’s infrastructure-building Belt and Road Initiative has raised alarm across the continent. Brussels fears China is buying influence in Europe’s periphery, sowing disunity and threatening democracy. Our latest in-depth DeepChina report explains the real story of China’s influence on Europe.
Gavekal Dragonomics
August 27, 2020
The “decoupling” of the US and Chinese economies that began with a trade war has now spread to almost all aspects of the relationship, with the Covid-19 pandemic accelerating the process. In this chartbook, Andrew and Dan show what decoupling looks like so far in 2020, using data on flows of trade, investment, technology, finance and people.
Gavekal Dragonomics
July 24, 2020
China has rapidly bounced back from its Covid-19 lockdown, but the recovery has been an unbalanced one with supply outpacing demand. Economic policy has also turned more cautious amid exuberance in property and financial markets. In this regular chartbook, the Dragonomics team outlines how the next stage of China’s recovery will proceed.
Gavekal Dragonomics
April 20, 2020
After lockdowns produced a historic contraction in activity in February, China’s economy began climbing out of its deep growth hole in March. In this chartbook, the Dragonomics team outlines the shape of the recovery, explains which sectors are leading and which are lagging, and breaks down the policy response and implications for markets.
Gavekal Research
June 11, 2020
The US is deepening its effort to limit Chinese technology giant Huawei’s access to components that rely on American design, which may prevent Huawei from rolling out 5G networks. The US is also broadening its efforts to constrain Mainland tech firms by using sanctions that impact suppliers to China’s government and military.
Gavekal Dragonomics
June 3, 2020
China research director Andrew Batson was joined by China macroeconomist Wei He and Asia analyst Vincent Tsui to discuss the news from the National People's Congress and what it means for China's economic recovery, the likely direction of fiscal and monetary policy, and the consequences of Hong Kong's national security law.
Gavekal Research
May 15, 2020
The rivalry between the US and China has taken a turn for the worse during the Covid-19 pandemic. In yesterday’s webinar, Tom Miller talked about how China has attempted to use the pandemic in its global influence strategy. Dan Wang updated viewers on the technology rivalry.