Gavekal Dragonomics

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.

The People’s Bank of China kept its policy rates unchanged on Friday, defying market expectations of a cut. Wei argues that the central bank's renewed caution casts doubt on its attempts to enforce yield-curve control in government bond markets.

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.

Today, pressure from China's excess capacity is on high technology, most prominently semiconductors. China has been investing in new semiconductor fabs to increase self-sufficiency and relieve chip shortages. All that new capacity is now starting to come to market, at a time when the world could have difficulty absorbing the extra supply.

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.

How much longer does China’s property crisis have to run? The collapse in housing sales, prices and construction activity has now run for three full years. In this piece, Andrew and Xiaoxi explore the cross-country data on housing busts to assess whether the crisis is still in its early innings, or getting closer to winding down.

As the dust begins to settle following Donald Trump's commanding victory in the US election, Gavekal Research partners Anatole Kaletsky, Arthur Kroeber and Louis-Vincent Gave assessed what the outcome implies for US growth and inflation, for global geopolitical risk and trade relations, and for financial markets around the world.

Markets are increasingly convinced that Donald Trump will win the US presidential race and Republicans may achieve a sweep of Congress. Yet with the key “swing states” still effectively in a dead heat between Trump and Kamala Harris, and well within the polling margin of error, the race remains highly competitive. Our panel assessed the underpinnings of the “Trump trade” but also explored macro and market scenarios in the event of Harris securing the White House.

A range of recent developments suggests that the world economy is moving into a period of higher nominal growth and persistent price pressures. China looks to be embracing a more concerted fiscal stimulus and, given the platforms of both presidential candidates, the United States is likely to stay in expansionary mode. Our panel assessed this situation and suggested investing strategies.