Gavekal Dragonomics
August 7, 2020
President Donald Trump signed executive orders on Thursday imposing restrictions on Tencent and ByteDance, two of China’s biggest software giants. In this report, Dan explains how the broad language in the orders might end up blocking any US person or company from working with the firms, dealing a major blow to their operations.
Gavekal Dragonomics
August 6, 2020
Chinese exports have outperformed expectations due to booming sales of goods related to Covid-19 and Chinese manufacturers staying open when their international counterparts were forced to suspend production. In this report, Thomas explains why China's export growth will continue to flatten in H2 as global trade catches up.
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 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
June 15, 2020
China’s economic data for May continued April’s wider recovery; however, Thomas, Rosealea and Xiaoxi argue that this upward momentum is losing steam. Weak external demand, tapering industrial production and Beijing’s aversion to further monetary easing all support the idea that China’s post-Covid bounceback is starting to plateau.
Gavekal Dragonomics
July 9, 2020
The Chinese government bond market has seen its biggest reversal in more than three years. Conflicting policy signals have made the priorities of China’s central bank difficult to decipher; in this report, Wei explains why it has now clearly returned to its “selective” easing mode of delivering targeted rather than broad-based economic support.
Gavekal Dragonomics
June 22, 2020
China’s medium-term lending facility rate and the loan prime rate were left unchanged in June, while short-term market interest rates have risen. In this Quick Take, Xiaoxi argues that, though the PBOC is likely to cut policy interest rates further this year, the pace of rate cuts is likely to be slower in the second half than in the first.
Gavekal Dragonomics
June 1, 2020
The Covid-19 lockdown led to a historic collapse in corporate capital expenditure in early 2020, but what comes next? In this piece, Thomas introduces a new model for understanding China’s investment cycle. Private-sector capex should stay weak in the second half of 2020, lagging public-sector infrastructure spending, but rebound in 2021.
Gavekal Research
July 24, 2020
The US decision to close China’s consulate in Houston is a big deal. The precise motivations are obscure but the story is not: the Trump Administration is turning up the heat on China before the US presidential election. In the next few months Washington is likely to make new moves pushing the US closer to a Cold War posture against China.
Gavekal Dragonomics
July 21, 2020
As the US election approaches, the Trump Administration is intensifying pressure on China on all fronts. In this report, Dan outlines the executive-branch agencies tasked with implementing sanctions and restrictions, what they have accomplished so far, and what tools are at their disposal should Trump decide to further escalate the situation.
Gavekal Dragonomics
June 18, 2020
US President Donald Trump has pledged a response to Beijing’s decision to impose national-security legislation on Hong Kong, and has now signed legislation to sanction officials involved in the crackdown on Uighurs in Xinjiang. In this piece, Dan outlines the various legal tools that the US can bring to bear and their possible effects.
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
June 16, 2020
The Covid-19 pandemic has shocked China’s financial regulators into allowing a substantial rebound in total credit growth. But they are not worried enough to abandon their strict control of shadow finance. As Xiaoxi explains in this piece, a recent bounce in the shadow finance numbers is due to a popular arbitrage which is now being contained.
Gavekal Dragonomics
June 12, 2020
As China tries to get the economy back to normal, it is focusing more on the plight of small businesses, who have lost weeks or months of revenue to the pandemic. Yet it has resisted offering the loan guarantees other countries have employed. In this piece, Xiaoxi assesses the other tools China is using to boost lending to the smallest firms.
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
July 8, 2020
National housing sales growth is likely to accelerate in June following May’s rebound on the back of supportive measures from local governments and easier access to credit. In this report, Rosealea outlines how the surge in sales might peak soon due to diminishing returns from local government stimulus as well as more cautious monetary easing.
Gavekal Dragonomics
March 10, 2020
Plans enacted by US national security hawks to toughen sanctions on Huawei and other Chinese tech firms have run into stiff resistance from both American tech firms and President Trump himself. Dan reports that, amidst this stalemate, both factions are mobilizing for a protracted fight over the fate of restrictions on exports to China.
Gavekal Dragonomics
February 18, 2020
Chinese electronics manufacturers are struggling to get their operations back to normal amidst the coronavirus outbreak. Dan outlines how this might lead to larger disruptions in the tightly scheduled mobile phone production cycle, and why smaller companies are more likely to postpone launching new products than their larger counterparts.
Gavekal Dragonomics
December 5, 2019
The Chinese government has made artificial intelligence a national development priority and is dedicating huge resources to the task. Yet, as Lance explains in this report, the effort is suffering from mismanagement, wasteful provincial competition and difficulty retaining skilled workers.
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 Research
July 6, 2020
Chinese equity markets are bounding higher on ebullient animal spirits. The CSI 300 index is up some 12.5% YTD in renminbi terms Monday morning. While the sequential rebound in profits from the first quarter’s dire situation has been heartening, the prospects for year-on-year earnings growth cannot justify this exuberance.
Gavekal Dragonomics
June 8, 2020
Financial markets are the latest field in which US-China political tensions are playing out. Thomas describes two lines of attack US hawks are pursuing against China: blocking Chinese firms from US equity markets and pressuring US asset managers to avoid Chinese equities. The risk associated with Chinese stocks has therefore materially increased.
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
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 Dragonomics
November 25, 2019
In her annual review of the Chinese consumer, Ernan analyzes the trajectory of household spending and unearths thematic opportunities in consumer markets. After 2019’s slowdown, consumption should stabilize in 2020 as the labor market improves. Luxury goods and cosmetics are booming, but overseas tourism and traditional retail are weaker.
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.