China

Stormy September So Far

Sep 7, 2023 1 min read paid

Good news is bad news again. The stock and bond markets sold off yesterday following better-than-expected readings for August's NM-PMI. In addition, the prices-paid indexes for both the NM-PMI and M-PMI increased in August heightening fears that inflation may have stopped moderating (chart). We disagree since both remain well below last summer's peaks. Today, Q2's revised productivity and costs report showed that hourly compensation

Ed Yardeni

China: Desperately Seeking a New Engine

Aug 16, 2023 2 min read paid

The Chinese are providing American consumers with cheaper goods. By doing so, the Chinese are increasing the purchasing power of American consumers, who are doing what they do best; they are shopping. It’s a gain for the US economy, which is getting better economic growth with lower inflation. It’s a loss for Chinese consumers, who are facing deflation and higher unemployment and dealing with the consequences of the

Ed Yardeni

China Exporting Deflation to US

Aug 8, 2023 1 min read

The US doesn't have to experience a recession to bring inflation down if China's export prices are falling because China is already in a recession. Consider the following: (1) This evening we learned that China's CPI fell 0.3% y/y during July, the first such drop since February 2021. The PPI fell 4.4% over the same period (chart). (2) The CPI inflation

Ed Yardeni

US Disinflation Is Made In China

Jul 13, 2023 2 min read paid

It's not quite the great fall of China. However, something is definitely wrong with China's economy. June's trade data showed that Chinese exports fell sharply for the second month in a row and imports have remained flat since mid-2021 (chart). It was widely expected that the end of the government's pandemic lockdowns late last year would boost economic activity in China and

Ed Yardeni

China's Post-Lockdown Recovery Fizzles

Jun 24, 2023 1 min read paid

Since April, we have been observing that China’s economic recovery over the six months since the government lifted pandemic lockdown restrictions in early December has been surprisingly weak. The country’s total imports have been flat since late 2021 through May of this year (chart). The rallies in the price of copper and in the China MSCI stock price index late last year and early this year have fizzled

Ed Yardeni

China's Post-Lockdown Recovery & Stimulus Disappoint

Jun 8, 2023 2 min read paid

The Chinese government started to lift its pandemic lockdown restrictions in early December last year. The economic rebound has been weaker than widely expected. Indeed, China's imports have been flat at a record high since mid-2021 and have remained so through May of this year (chart). Furthermore, inflation has been nonexistent as the Chinese CPI rose just 0.1% y/y in April, while the country's

Ed Yardeni

What's the Matter with China?

May 23, 2023 2 min read paid

The People’s Bank of China (PBOC) stands out among the major central banks. It is the only one that has been continuing to provide additional monetary policy stimulus. This suggests that China’s economy isn’t performing as well as the government would like to see. The PBOC’s reserve requirement ratio for commercial banks has been lowered three times since the start of 2022. Over the past 12

Ed Yardeni

China's Zero-Covid Policy Is A Disaster

Nov 24, 2022 1 min read

Investors are hoping that the Chinese government will soon ease its zero-Covid policies. The facts on the ground suggest that the latest wave of the pandemic is getting worse in China and that the government is continuing to respond with more lockdowns and other severe restrictions (chart). Japanese brokerage firm Nomura estimates that more than a fifth of the country is under restricted movement. This is weighing on China'

Ed Yardeni

China Scrambles to Avoid Lehman Moment

Jul 20, 2022 1 min read

How do you say "Lehman Moment" in Chinese? The Chinese government is scrambling to avert such a calamity resulting from China's real estate bust. There's a global housing recession underway, led by China. That's why the price of copper has been in a freefall, plunging 33% from $4.94 on March 4, 2022 to $3.31 today (chart). We’ve been tracking

Ed Yardeni

DEEP DIVE: Braking China

Jul 17, 2022 2 min read paid

China continues to watch its real estate market deflate and its Covid cases inflate, while worries about its banking system grow. No wonder the recent rally in Chinese shares came to an abrupt halt (Fig. 4). Here’s some news that caught our eye:

Ed Yardeni

Will Covid Zero Be Followed by Higher Inflation?

Jun 29, 2022 1 min read paid

China's experience with Covid Zero raises the age-old question of whether the cure is worse than the disease. For global investors, the question is if and when China relaxes its Covid Zero restrictions will global inflation soar along with commodity prices?