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Gavekal Dragonomics
Dragonomics Team
Oct 18th 2021
A Steady Slowdown
Chinese economic growth continued to slow in 3Q21 thanks to ongoing supply constraints and demand weakness. In this Quick Take, the Dragonomics team explains that while China’s poor September figures reflect supply-side constraints, of greater concern is the weakening demand side due to a deepening property downturn.
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Gavekal Dragonomics
Xiaoxi Zhang, Thomas Gatley, Ernan Cui
Oct 14th 2021
The Long Winter For Small Business
China’s small businesses are having a rough 2021: business conditions have stagnated or deteriorated since the recovery in late 2020. There’s been much debate on the causes of their struggles, but the biggest culprits are the ripple effects from the government’s zero-tolerance Covid policy and its tightening of credit and real-estate policies.
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Gavekal Research
Louis Gave
Sep 29th 2021
Q&A: China’s Investibility
In the last few weeks, as China Evergrande’s financial troubles have deepened, Louis and Gavekal’s China team have fielded a spate of questions from clients about China’s investibility. In this paper, Louis offers a distillation of these conversations, presented in a question-and-answer format.
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Gavekal Research
Wei He
Sep 21st 2021
No Escape From The Evergrande Effect
Fears about the potential systemic risks posed by troubled property developer Evergrande reverberated through global financial markets on Monday. Unless China’s regulators seriously mismanage the situation, a systemic crisis in the country’s financial sector is not on the cards. Nevertheless, lenders will not be able to escape the costs.
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Gavekal Dragonomics
Dragonomics Team
Sep 15th 2021
The Window Is Closing For Structural Reform
China’s dismal August economic figures suggest that the “window of opportunity” identified by the Politburo in April, when officials hoped to take advantage of China’s post-Covid rebound to focus on longer-term structural priorities, is now closing. However, it is still too early to expect policymakers to shift gears into a supportive stance.
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Gavekal Dragonomics
Rosealea Yao
Aug 24th 2021
Developers Feel The Squeeze
The steady drumbeat of tightening on China’s property developers is taking its toll on construction activity. In this report, Rosealea explains why this weakness in construction will not unduly worry policymakers and should even help them achieve their goal of reducing steel production. Developers will therefore continue to feel the squeeze.
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Gavekal Dragonomics
Dragonomics Team
Aug 16th 2021
A Bumpy Slowdown
Chinese economic data weakened across the board in July as disruptions caused by extreme weather exacerbated the country’s wider economic slowdown. In this report, the Dragonomics team explain why policymakers are expected to offer limited support in H2, support which will likely be insufficient to counteract the slowdown in exports and property.
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Gavekal Dragonomics
Rosealea Yao
Aug 05th 2021
Another Squeeze For Steelmakers
Steel futures are on the rise again after several provinces announced plans to cut production. This might sound familiar: prices spiked in April and May following similar announcements. Rosealea writes that this time is different, as slowing construction activity in 2H21 should lower steel demand, making production easier to control.
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Gavekal Research
Rosealea Yao
Jul 28th 2021
The Evergrande Drama Plays Out
Investor confidence in Evergrande Group, China’s second-largest property developer, has been pummeled in recent weeks. While Evergrande has managed to put out the latest round of fires, and a collapse is unlikely, Rosealea argues in this piece that market volatility for developers will probably continue as financial regulators keep on squeezing.
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Gavekal Dragonomics
Dragonomics Team
Jul 15th 2021
A Manageable Decline
Chinese economic data for June showed cyclical sectors beginning to decline from a strong peak, while consumption growth is still struggling to regain pre-Covid levels. In this Quick Take, the Dragonomics team explains why China seems on track for a manageable decline in H2.
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Gavekal Dragonomics
Rosealea Yao
Jul 06th 2021
Another Go At The Property Tax
After two years of silence, the Chinese government has signaled it is making a new effort to implement a residential property tax by expanding local trials. In this report, Rosealea explains why, against a better economic backdrop and with less organized opposition, the property tax is likely to stick this time around.
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Gavekal Dragonomics
Rosealea Yao
Jun 07th 2021
The Urbanization Surprise
China’s 2020 census revealed that urbanization has been faster over the past decade than official statistics showed. That means the fundamentals for housing demand are stronger than most had realized. As Rosealea argues in this piece, the census should drive an upward reassessment of long-term trends in China’s urbanization and commodity demand.
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Gavekal Dragonomics
Ernan Cui
May 12th 2021
The Population Turning Point Gets Closer
China’s 2020 census has confirmed that the country’s population could peak around 2025, rather than the consensus forecast of around 2030. Ernan writes that inconsistencies in the data suggest the census figures are overstated; indeed, China’s population may already have peaked in the last year, a decade ahead of schedule.
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Gavekal Dragonomics
Dragonomics Team
Apr 16th 2021
The Two-Speed Recovery Continues
Chinese GDP growth lost momentum in 1Q21 according to economic data released on Friday, with broad strength in the industrial sector offset by weakness in household consumption, particularly within services. In this Quick Take, the Dragonomics team dive into China’s Q1 economic figures and explain why they paint a picture of stability.
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Gavekal Dragonomics
Xiaoxi Zhang, Rosealea Yao
Apr 12th 2021
Curbing Mortgage Enthusiasm
China’s regulators are strengthening their curbs on the property market as its post-pandemic exuberance continues. In this piece, Xiaoxi and Rosealea explain the central bank’s latest moves to curb disguised mortgage lending and cap overall loan growth. The main effect of these controls will be to slow lending to households and cool housing prices.
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Gavekal Dragonomics
Ernan Cui
Mar 18th 2021
The New Plan For Urbanization
The 14th five-year plan outlines significant changes to China’s household registration (hukou) system. In this report, Ernan writes that this new policy direction is to reduce the significance of the system over time by reducing urban/rural inequality. Rural areas will benefit, but at a cost to China’s overall economic growth.
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Gavekal Dragonomics
Andrew Batson
Feb 23rd 2021
To Hold Back The Tide Of De-Industrialization
China’s government is focusing on a new economic metric: the manufacturing share of GDP, which looks to feature in the next five-year plan. Rather than accept de-industrialization, it wants “stability” in manufacturing. In this piece, Andrew explains why China is worried about the fall in the manufacturing share, and whether it can be stopped.
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Gavekal Dragonomics
Rosealea Yao
Feb 10th 2021
Propping Up Property Sales
Housing sales growth is holding up well despite financial tightening and hawkish policymaker rhetoric. In this report, Rosealea explains why regulators are pressuring developers to cut prices, while increased household savings means more families can take advantage of these discounts. 2021 will therefore likely be a strong year for housing sales.
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Gavekal Research
Anatole Kaletsky
Jan 22nd 2021
Risks In The Biden Era
In December, Anatole outlined 10 disparate risks that could derail the bull market in 2021. That was before the Democrats won full control of the US government, paving the way for approval of Joe Biden’s new super-size stimulus package. In light of the developments over the last month, Anatole reassesses his 10 risks.
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Gavekal Dragonomics
Dragonomics Team
Jan 18th 2021
A Two-Speed Recovery
China’s Q4 GDP growth surpassed pre-Covid rates, with housing and manufacturing leading while services lagged and infrastructure investment slowed. In early 2021, this divergence is likely to continue as consumers stay home for the Chinese New Year and poor credit growth drags on infrastructure investment.
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