Julian Evans-Pritchard - Capital Economics


Last quote by Julian Evans-Pritchard

The issue for the Chinese leadership is how to deal with those layoffs in a way that maintains political stability and in a way that the workers are relocated and continue to contribute to the economy.feedback
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Apr 21 2017 China
We can learn a lot about a person if we know what types of things he or she talks about or comments on the most frequently. There are numerous topics with which Julian Evans-Pritchard is associated, including China and PBOC. Most recently, Julian Evans-Pritchard has been quoted saying: “The Chinese are not going to be happy about it, but I do think there are more concerns about Trump's trade policy than there were previously under Obama. They're less willing to push as hard against these kinds of probes, because they don't want to escalate tensions.” in the article Why China is likely to stay quiet on Trump's steel probe.
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Julian Evans-Pritchard quotes

The base effects that have boosted inflation in recent months are soon going to go into reverse. Meanwhile, tighter monetary policy, slowing income growth and cooling property prices should keep broader price pressure contained over the medium-term.feedback

With $3 trillion viewed by some as an important threshold, this decline will likely spark renewed debate over how long the People's Bank (PBOC) can continue intervening to support the renminbi.feedback

Today's PMI readings suggest that China's economy continued to perform well last month. China's recent recovery appears to remain largely intact for now.feedback

With tailwinds from policy stimulus now fading, we expect clearer signs of a renewed slowdown to emerge during the next couple of quarters.feedback

The slowdown is disappointing given signs from recent business surveys, and from Korea and Taiwan's export data, that global demand continued to strengthen in December.feedback

Regulators have a lot of control over what happens to those deposits, and they can control the rate of inflows into onshore FX deposits.feedback

I'm sceptical that the People's Bank will really tighten conditions as much as people are expecting. The bond rout looks like it's gone a bit too far for me.feedback

Another set of broadly positive data suggest that China is on track to end this year on a strong note.feedback

Most countries have yet to publish trade data for November but the other early reporters, Korea and Taiwan, also posted larger-than-expected pick-ups in export growth.feedback

The improvement (in exports) reflects a strengthening in global demand, with recent business surveys suggesting that developed economies are on track to end the year on a strong note.feedback

While global demand has recovered somewhat recently, lower trend growth in many developed and emerging economies means that further upside is probably limited.feedback

Better-than-expected trade data out of China today reflects both an uptick in global demand as well as the continued strength of the domestic economy.feedback

The strength in PMI numbers is unlikely to be sustained as much of it can be explained by previous stimulus measures. We see increased signs of slowdown in domestic economies, particularly in China.feedback

The question is then what's going to happen to sales growth – it's probably not going to recover much further than it already has. If I was a Chinese firm, I'd have some concerns about the macroeconomic outlook over the next couple of years.feedback

Declining U.S. influence would give China more freedom to shape the regional landscape.feedback

We think producer price inflation will recover further in coming quarters but will top out at a little over 4 percent y/y before dropping back again.feedback

Most indicators suggest that domestic demand is still improving and import values will also benefit from the latest step up in commodity prices.feedback

A sudden turnaround this month (for exports) seem unlikely, (however) stronger growth in developed markets ... should at least prevent shipments from slipping further.feedback

Nonetheless, the recent recovery is ultimately on borrowed time given that it has been driven in large part by faster credit growth and a property market boom, both of which policymakers are now working to rein in.feedback

We won't get the full breakdown until tomorrow but we suspect that the key driver was stronger growth in real estate services, on the back of buoyant property sales. Financial sector growth is also likely to have recovered as last year's equity bubble dropped out of the base for comparison.feedback

It's a question of reversing the previous distortions.feedback

It suggests quite significant smoothing of the data behind the scenes. Even by Chinese standards, this is quite rare.feedback

It's definitely unusual in an international context. There are almost no countries that have such stable GDP growth rates.feedback

As the boost from policy stimulus begins to wear off – probably at some point early next year – continued structural drags mean the economy is set to begin slowing again.feedback

The official GDP figures remain too stable to tell us much about the performance of China's economy. Our own measure of economic activity suggests that growth actually picked up last quarter, though the improvement clearly won't last.feedback

The government has been able to stabilize the economy this year with quite a lot of stimulus, but it hasn't actually been as effective as a lot of people had expected.feedback

We tend to focus on less high-profile, volume-based indicators, which don't have to be deflated with price indices, such as freight volume, passenger traffic, floors under construction, among other measures.feedback

This could be an early sign that the recent recovery in economic activity is losing momentum.feedback

The data we have so far suggests that a drop in import volumes of a number of key commodities, including iron ore and copper, are partly responsible.feedback

It's almost $20 billion, which is quite a considerable fall. I think there is still quite significant intervention in the currency markets by the PBOC and I think today's data highlights that.feedback

Property sales continue to expand at a rapid pace. We are skeptical how long this can last given that fundamental factors point to housing demand growth in the low single digits.feedback

The picture is still one of rising price pressures, and for that reason I'd be skeptical of claims this latest drop in inflation is going to increase the likelihood of further monetary easing by the central bank. What's holding them back from further easing is not inflation concerns, it's concerns of credit risks.feedback

A gradual recovery in global demand probably means some further upside to export growth in the coming quarters. Import growth should also pick up further on the back of stronger domestic demand and a further recovery in global commodity prices.feedback

While the official non-manufacturing PMI remains strong, it did soften from 53.9 to 53.5 last month. This was entirely due to a fall in the construction sector sub-index. The stats bureau has blamed the drop on disruptions due to flooding and unusually hot weather but it may also be a sign that the recent property boom is starting to run out of steam.feedback

I think eventually they'll come under pressure to ease further, but given the economy is still stable, I don't think it'll happen this year.feedback

Our view is that the People's Bank of China doesn't really have any reason to ease until we start to see clear signs of another downturn.feedback

It is a sign that policymakers remain committed to financial reform and capital account liberalization.feedback

China has been pushing for the SDR to become more widely used for some time, as a way to challenge the dominance of the dollar without pushing the renminbi as a direct competitor.feedback

They don't include all the new government debt issuance - a significant portion of which is being used to refinance existing local government financing vehicle debt.feedback

Exports were very strong last year in February because the Lunar New Year started so late and much of the usual disruption from the holiday was pushed into March. So the implication is that we'll probably see a significant reversal and a stronger number next month.feedback

Ideally, we'd like to see a bigger overhaul of the state sector including a lot more privatization.feedback

Around this time of year, the PBOC does typically do large repo injections just for seasonal reasons. That said, it seems a bit early to do that now given Chinese New Year is still a few weeks away. There might be an element of easing liquidity conditions a bit following the stock market fall yesterday.feedback

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