China’s capital account saw a large deficit due to an unprecedented decline of FDI and an increase of ODI.
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This year’s Central Financial Work Conference struck a more cautious tone than the last such meeting, held in 2017.
Exchange rate defense and a more sanguine economic outlook may be behind the higher market rates, and the new issuance may drive them up further.
Housing and exports are still down but their declines have slowed, and consumption has seen an ongoing recovery.
Companies are attempting to dodge restrictive trade policies by increasing their outbound investment and moving operations overseas.
Consumption saw the best holiday recovery so far this year, but the housing market declined even further, dragged down by tier-3 cities.
The EU will soon launch an anti-subsidy investigation into EVs imported from China, which will likely result in price floors and tariffs next year.
Higher commodity prices appear to herald the end of China’s industrial deflation woes, and the CPI is also poised to rise.
This note is the first in a four-part series in which we will review China’s reform progress of the past decade and attempt to explain the market’s discontent.
Beijing has introduced more easing measures for the real estate sector, in addition to last week’s capital market measures.