Rising Inflation in China

PPI in China has swung from deflation to relatively high inflation over the last 6 months. Wholesale prices are rising fast, import prices are also rising due to the lagged effects from a weaker yuan are moving sharply higher. (CPI, especially core CPI, had been...

China: the Capital Leak Grows

A pivotal theme for 2017 will be capital outflows from China leading to contraction of domestic liquidity. Policymakers in China managed boost domestic liquidity earlier this year by state-directed lending, but there are signs capital is leaking out at an accelerating...

The Remorseless Logic of Capital Outflows from China

China is in the midst of a debt-deflationary bust.  It is an ongoing process that has gathered pace recently.  Capital outflows are a symptom of this, and a weaker yuan is an integral part of the attempted cure.  We expect more of this to come. We wrote back in the...

Old habits die hard in China as FX reserve growth surges

Investors welcomed the vow made last year by the new Chinese government to reform the economy  through a clamp-down on shadow banking and excess liquidity as well as to commit to a strategy of re-balancing the economy. Still, it seems difficult for China to break out...

The Great Brick Wall of China

In this report we discuss the outlook of the Chinese economy across a number of key parameters: re-balancing the economy, the current account/exchange rate and the risks stemming from rapid credit expansion. The central thrust of our argument is that China will not...