By Qu Hongbin, Co-Head of Asian Economic Research, HSBC
For many, China’s growth model, which has delivered average annual GDP growth of 10 per cent over the past three decades, simply looks wrong: a national savings rate of around 50 per cent is unheard of in a large, modern economy.
A typical diagnosis states that China invests too much and consumes too little. The prescription is “rebalancing” – moving the economy away from investment towards consumption-led growth. However, a consumption-led growth model has little in theory or evidence to support it. Continue reading »
Two out of the four BRIC economies of Brazil, Russia, India and China face severe labour shortages as soon as 2020.
“Many emerging markets are reaching the final phase of their demographic peak,” say the authors of a report by Boston Consulting Group which quantifies the extent of potential labour shortages and surpluses globally over the next 16 years.
The danger of a declining work force is well recognised in China, which is already suffering the impact of the one-child-per-family policy, in effect since 1979. BCG estimates that China’s surplus of about 65m workers in 2020 could turn into a shortage of up to 24.5m people by 2030. Recent proposals to ease the one-child policy, if implemented, would have only a limited impact, since children born now would not enter the workforce until after 2030. Continue reading »
Stronger readings in China helped drive a marginal uptick in emerging market (EM) manufacturing activity in May, breaking a declining trend that has lasted for five consecutive months, according to purchasing manager index (PMI) data aggregated by Capital Economics.
The Capital Economics data, which showed an EM manufacturing PMI for May of 50.1 compared to 49.6 in April, coincided with a slight upswing in investment bank sentiment toward the Chinese economy. Nomura raised its China GDP forecast for the year, while Barclays saw a further easing in Beijing’s monetary policy. Continue reading »
April was a pretty subdued month for emerging market manufacturers. But it seems to have been worse for the BRIC countries – especially China, Russia and Brazil (but not for India) – than for smaller EM economies in general. Some countries that thrive on Eurozone demand posted a fairly buoyant performance.
Overall, EM manufacturing’s PMI (purchasing managers index) fell to 49.6 in April, its lowest reading since June last year and the second straight month it has been below 50, which in theory separates contraction from expansion. Continue reading »
Chinese steel mills were suffering a medley of woes in mid-March as sales slowed, production levels slumped and profits plunged, according to an investment bank survey published on Tuesday that foreshadows the rising risk of debt defaults in the world’s largest steel producer.
Macquarie Commodities Research, quoting a proprietary survey of Chinese steel mills and traders conducted in mid-March, found that large, medium and small steel mills were all enduring a contraction in orders compared to the same period in February, and profits had declined to historic lows. Continue reading »
How are China’s manufacturers feeling? Ending the year on a bit of a downer it seems, if HSBC’s Flash PMI is anything to go by.
The reading came in at 50.4, just above the 50-mark that separates contraction and expansion, and pointing to a three-month low. Clear evidence of a cooling in the manufacturing sector? Certainly, if the early reading is a reliable gauge. However, the flash reading is proving to be quite a volatile guide to the final PMI figure. Continue reading »
Last week’s “flash” estimate for China’s manufacturing sector turned out to be deeply wrong.
The HSBC/Markit survey of the sector came in well below forecasts this morning at 50.2, a full point below the estimate posted last week. Continue reading »
By Sammy Suzuki of AllianceBernstein
China has been an incredible engine of manufactured exports over the past decade and the central player of the Brics era. But mounting competition from other countries is gradually pulling production away from China. How should investors proceed? Continue reading »
When it comes to manufacturing indices, China is the big one. The question is which index to look at: the official state figures, or the widely-used HSBC/Markit index? They can often show different results.
For March, it’s relatively good news whichever index you pick. Official figures? Up, at 50.9. (50 is the mark that separates expansion from contraction), rising from 50.1 in February. HSBC/Markit? Up, at 51.6, higher than February’s 50.4. Continue reading »
Repatriating manufacturing back from China isn’t only a phenomenon of developed western markets.
Taiwan is home to many of the companies that helped build the Chinese contract manufacturing model and which continue to pour billions into the mainland. Yet Taipei, too, has been rolling out ambitious plans to bring those manufacturers back home. Will it work? Maybe. But as one economist points out, an equally interesting area to track is how Taiwanese companies are changing the way they invest into China. Continue reading »
On Wednesday, the streets of India will be filled with men and women, boys and girls, flinging multi-coloured powder and water over one another as they celebrate the beginning of spring. The festival of Holi will end with stained carpets and hot baths, as people return home to spend time with loved ones – and probably drink bhang, a traditional brew brimming with cannabis.
It is a distinctively Indian sort of mayhem. Doesn’t sound like something the straight-laced Chinese could get involved with, does it? It is, though. Continue reading »
What to make of Monday’s China flash purchasing managers index from HSBC, given the distorting impact of the Chinese New Year holiday?
With a reading of 50.4 (just above the 50 threshold that separates contraction and expansion), there’s something in it for bulls and bears alike. Continue reading »
Long assailed for running a massive trade surplus with the US, China has come out as the big winner from a new method for calculating global trade flows. When “value added” production is factored in, China’s surplus vis-à-vis the US shrinks by 25 per cent, according to the World Trade Organisation and the Organisation for Economic Cooperation and Development.
These are important findings that Beijing will no doubt cite the next time it wants to repel foreign criticism of its export and currency policies. But the calculations also give rise to a knock-on question: could China’s surplus prove to be stickier precisely because it still has a ways to go up the value chain? Continue reading »
There are further signs that the recovery in China’s manufacturing sector is taking hold, even if Santa Claus hasn’t been ordering an awful lot from China this year.
December’s flash HSBC/Markit China purchasing managers’ index stood at 50.9, a 14-month high and an improvement from November’s 50.5. A sub-index for new orders also rose for the fifth month to 52.7, the highest level since April 2011. Continue reading »
China’s flash PMI – released on Thursday by HSBC – marked a small, but key moment in China’s recent economic narrative. For the first time in over a year, the gauge showed expansion in the manufacturing sector with a reading of 50.4.
It follows promising October data for trade, retail sales and investment. China’s official PMI already showed expansion in the sector last month. Continue reading »