Gavekal Dragonomics

The sweeping overhaul of China’s financial regulators unveiled this month will see the People’s Bank of China cede some authority to the top political leadership and other regulatory agencies, which are focused on restructuring debts to avoid market stress.

The dramatic reversal of both Covid restrictions and economic policy at the end of 2022 raised some big questions about the direction China is heading. The reshuffle of the leadership and governing institutions unveiled in March has now clarified the political direction. There is a course correction underway on the economy, but top leader Xi Jinping is still doubling down on the centralization of decision-making.

Looking further into 2023, our US team of Will Denyer and Tan Kai Xian have become increasingly concerned that there could be an impending deflationary bust in the US. Both Louis Gave and Anatole Kaletsky disagree with this stance, although for different reasons.

Two main features distinguish the US-China rivalry from the old Cold War. The first is economic interdependence between the US (and its allies) and China. The other is the lack of proxy wars. Unlike economic interdependence, the no-proxy-war difference could easily be erased.

The year 2022 was a dark one for nearly every segment of China’s tech sector, with internet platforms reeling from Beijing’s regulatory campaign and hardware champions in chips and telecoms dealing with harsh US sanctions. Will 2023 be any better? Dan answers the eight biggest China tech questions for the coming year.

The downward spiral in US-China relations has paused following a meeting between Xi Jinping and Joe Biden at the G20 summit. Dan argues that domestic political trends on both sides suggest the tone of relations will be more constructive in coming months, at least relative to recent, low expectations. The question is how long the respite will last.

The government’s 70-city home-price indexes showed that more cities posted rising than falling prices in January, for the first time in more than a year. Rosealea argues that on the whole, recent data suggest the property-sector recovery has now started, but is tepid and concentrated in the largest markets.

China’s chaotic reopening has resulted in a public health mess which could go on for months. That will not derail a robust economic recovery which will be aided by growth-supporting government policies, especially in the property sector. Wei and Thomas outline what the recovery is likely to look like and which assets will benefit the most.

China’s reopening from Covid containment is already well under way, and looks likely to be fast and messy. In this webinar members of our China team assessed the outlook next year for monetary and fiscal policy, capital markets and the country’s ailing property sector.

Hoping to turn the page on a traumatic 2022, China’s government has unveiled a new agenda to be carried out by fresh faces in 2023. In this webinar our China team discusses the outlook for the economy, the political risks and the drivers for markets.

In this webinar, Will Denyer, Tan Kai Xian and Cedric Gemehl reviewed the state of the US and European banking systems, and explored what the SVB debacle means for the economy, central bank policy and portfolios.

Global investors fled Chinese assets in 2022, believing there were simply too many risks from China’s confrontation with the West and domestic policy missteps. But since last November, portfolio money has poured back in, casting doubt on the idea that China is permanently uninvestible.