Gavekal Dragonomics

The People’s Bank of China has been busy over the past year as its new governor, Pan Gongsheng, has overseen multiple interventions in financial markets and attempted risky policy changes. Wei argues that Pan’s aggressive policymaking style, along with a green light from top policymakers for more easing, means the chances of a large interest-rate cut are rising.

China’s pivot to economic stimulus was led by the central bank, but most pundits have been dismissive: monetary policy doesn’t matter, they said, what matters is whether there is going to be a big fiscal stimulus. In this piece, Andrew asks: what if the current obsession with a massive fiscal package is wrong, and the real problem is with monetary policy? What if China’s economy needs not another injection of debt-financed public spending, but simply for lower interest rates to work?

This week, a set of high-level announcements and media leaks indicated China’s government is finally trying to get ahead of expectations—and that means a big shift for financial markets. Andrew and Wei argue that although there are meaningful implications for immediate growth, the government must continue to deliver on their promises to sustain the recent rally in Chinese assets.

US President Joe Biden escalated the semiconductor war against China with a fresh round of chip export controls, and for the first time, China retaliated immediately with export controls on critical minerals and some technology products. Tilly argues that these restrictions are designed to inflict actual pain, and technology controls are increasingly a two-way street.

China's Communist Party is gearing up to hold its Third Plenum later this month, an event where top leader Xi Jinping will have a platform to articulate and possibly revise his vision for the economy. With domestic consumers in the doldrums, and trade tensions escalating, is a course correction for China coming? In this webinar our team of China experts explained what to expect, and not to expect, from this high-level conclave.

China’s long-running drive to reduce its reliance on foreign technology is entering a new phase, as Tilly explains in this piece. Though most of the documents relating to this localization drive remain secret, the political signals to companies and local governments are increasingly quite clear: domestic suppliers are preferred.

In the first days of 2025, Chinese equity markets took a leg down, long-term bond yields hit all-time lows and the renminbi weakened. The government’s promises of more stimulus have not been enough to stabilize expectations. What signals could be more decisive? Andrew makes the case that the most effective policy move would be not more social-welfare support, but a more direct intervention in the property market.

The most straightforward way of judging whether China’s still-evolving stimulus package is working is whether it reignites animal spirits in the property market. The top-level signaling on property has clearly changed, with an unambiguous mandate to put a floor under the long-running decline, and there are some early signs homebuyers are getting back into the market.

The continued decline in China’s property sales and prices, now a full three years old, is starting to hurt even the strongest real-estate firms: state-owned developers. Xiaoxi argues that their worsening finances makes it harder to resolve the delays of housing sold in advance and restore household confidence in the presales system, increasing the downside risks ahead.

Crypto-currencies had a stellar 2024, with a particularly strong run after Donald Trump’s win in the November election. The president-elect has appointed crypto enthusiasts to his cabinet and mused on adopting a Strategic Bitcoin Reserve. Our panel looked at both structural factors like the prospect of mass crypto adoption and more pressing cyclical issues such as how the vertiginously positioned asset class handles a likely more challenging liquidity environment in 2025.

With the fall of French prime minister Michel Barnier’s three-month-old government, reasons are mounting to be grumpy about Europe. Our panel considers all the relevant factors, yet also ask whether the gloom is overdone given that almost no one is asking what happens if things go right, or prove to be not as bad as expected.

Donald Trump’s return to the White House in January threatens to stir a trade war and potential upheaval in currency and capital markets. Our analysts assessed the impact from the perspective of economies in the US, Europe, China and major emerging markets.