### Summary
The global economy is showing signs of decoupling, with the US economy remaining strong and China's economy disappointing at the margin. The recent data suggests that the US economy is resilient, with consumption and other indicators pointing in a positive direction. However, there are concerns about the bear steepening of the US curve and the repricing of the long end of the curve. In contrast, China's economy continues to struggle, with weak data and monetary policy easing. Japan has surprised with positive data, but there are questions about whether the current inflation shift will lead to tighter monetary policy. Overall, there are concerns about a potential global economic recession and its impact on various economies.
### Facts
- 💰 Despite the decoupling of the US and China economies, concerns remain about the negative impact of a China slowdown on global growth.
- 💹 Recent data show that the US economy, particularly consumption, remains resilient.
- 🔒 The bear steepening of the US curve and the repricing of the long end of the curve are causing concerns.
- 🇨🇳 In China, weak data on consumption and investment and declining house prices continue to affect the economy. The PBoC has eased monetary policy.
- 🇯🇵 Japan's 2Q data surprised with strong export growth, but there are concerns about the impact of a potential inflation shift on global yields.
- 🌍 The global economy is at risk of recession, with concerns about the impact on emerging market economies and the US economy.
### Summary
Growing concerns about global economic growth and uncertainties in monetary policy have led to turbulence in financial markets, with rising bond yields and a decline in equity markets. Key factors affecting growth include interest rates, bond yields, and access to funds, which may result in a credit crunch and a more risk-averse environment in capital markets. China's shift towards self-sufficiency, combined with a more prudent policy environment, slower population growth, and trade sanctions, will lead to slower and more erratic growth in the country. Although there are near-term concerns, the longer-term outlook for global growth remains positive.
### Facts
- Global economic growth is a concern, reflected in rising bond yields and a decline in equity markets.
- Policymakers, particularly in the US, are worried about overtightening monetary policy.
- Western economies, including the UK, have proven resilient despite expectations of a recession.
- Lower inflation will boost spending power, but growth will depend on where interest rates and bond yields settle.
- Businesses face challenges in raising funds due to a credit crunch, tough lending conditions, and a risk-averse capital market environment.
- The International Monetary Fund forecasts global growth to slow from 3.5% last year to 3% this year and next, with Asia being a major driver.
- Concerns about deflation in China exist, but low inflation is more likely.
- China's shift towards self-sufficiency in response to trade wars has coincided with a more prudent policy environment and the need to curb inflation and manage debt overhang.
- A shrinking population and structural changes in China will result in slower and more erratic growth.
- Private sector activity remains strong in Asia, and Japan's economy is experiencing an economic rebound.
- Western economies previously experienced a prolonged period of cheap money, which led to imbalances and misallocation of capital.
- Prudent monetary policy in some emerging economies provides more room to act in response to economic weakness.
- Concerns exist regarding rising policy rates in the US, UK, and euro area and the tightening of central banks' balance sheets.
- The definition of a risk-free asset is being questioned, as government bonds, previously considered safe, have witnessed negative total returns.
- There has been a rise in shadow banking and non-bank financial institutions, with collateral in the form of government bonds playing a crucial role.
Overall, the focus is shifting from inflation to growth, and future policy rates may need to settle at a high level. High levels of public and private debt globally limit policy maneuverability and expose individuals and firms to higher interest rates.
### Summary
China's fiscal revenue rose 11.5% in the first seven months of 2023, but at a slower pace than the previous six months, indicating a loss of economic momentum.
### Facts
- 💰 China's fiscal revenue increased by 11.5% in the first seven months of 2023.
- 💸 Fiscal expenditure grew by 3.3% to 15.2 trillion yuan ($2.10 trillion).
- 📉 In July, fiscal revenue only rose 1.9% year on year, slower than the previous month's increase.
- 📉 Fiscal expenditure fell 0.8% in July, narrowing the decline compared to the previous month.
- 🌍 China's economy grew at a sluggish pace in the second quarter due to weak demand domestically and internationally.
- 📉 The consumer sector in China experienced deflation in July, with analysts predicting persisting price stagnation for the next six to 12 months.
China's fiscal revenue increased by 11.5% in the first seven months of 2023, but the growth rate was slower than the previous six months, indicating a potential decline in the economy's momentum.
China's economy, which has been a model of growth for the past 40 years, is facing deep distress and its long era of rapid economic expansion may be coming to an end, marked by slow growth, unfavorable demographics, and a growing divide with the US and its allies, according to the Wall Street Journal.
Consumer spending growth is slowing as the economy stabilizes, with consumers prioritizing essential purchases and adjusting their spending habits in response to rising interest rates and financial pressures.
Despite predictions of a slowdown, the American economy continues to show strong growth, with recent data suggesting annualized growth of nearly 6% in the third quarter; however, concerns about overheating and potential inflation, as well as increasing bond yields, raise doubts about the sustainability of this growth.
China's economy is at risk of entering a debt-deflation loop, similar to Japan's in the 1990s, but this can be avoided if policymakers keep interest rates below a crucial level to stimulate economic growth.
China is implementing measures to boost household spending, ease property policies, increase car purchases, improve conditions for private businesses, and bolster financial markets in an effort to revive the economy's recovery and improve the business environment.
China needs to fully utilize policy space to bolster economic growth and market expectations by making significant adjustments in fiscal and monetary policies, according to a senior economist and political adviser. The economist emphasizes the importance of sending strong signals to the market and considers options such as interest rate cuts, increased deficit-to-GDP ratio, and infrastructural improvements to address economic challenges caused by global demand stagnation and tightened US monetary measures.
China's economy is experiencing a structural slowdown and becoming increasingly opaque, making it difficult for outsiders to understand the true state of the country's economic affairs, as President Xi Jinping prioritizes ideology over economic growth and transparency.
China's economy is struggling due to an imbalance between investments and consumption, resulting in increased debt and limited household spending, and without a shift towards consumption and increased policy measures, the economic slowdown may have profound consequences for China and the world.
China's economy is not as bad as perceived, with consumer spending picking up and indicating that growth is moving in the right direction, according to an official at the British Chamber of Commerce in China.
China's failure to restructure its economy according to President Xi Jinping's bold reform plans has raised concerns about the country's future, with the possibility of a financial or economic crisis looming and a slow drift towards stagnation being the most likely outcome. The three potential paths for China include a swift, painful crisis; a gradual winding down of excesses at the expense of growth; or a switch to a consumer-led model with structural reforms that bring short-term pain but lead to a faster and stronger emergence.
China's economy is facing a "new new normal" due to a declining population and weak confidence in its post-Covid recovery, prompting calls for systemic reforms to revive growth. The country's aging and shrinking population poses challenges to productivity, consumption, and long-term growth potential, leading major investment banks to cut growth forecasts. Policy adviser Cai Fang suggests relaxing population controls and focusing on expanding consumption as strategies to boost economic growth.
China's economy is showing signs of slowing down, including a decrease in GDP growth rate, declining exports, deflationary consumer price index, high youth unemployment, a weakening yuan, and a decrease in new loans, which could have global implications.
China is considering further easing measures in the property market and increasing fiscal support for infrastructure investment to boost economic growth in the fourth quarter, as sluggish demand remains a challenge.
China's economic growth has slowed but has not collapsed, and while there are concerns about financial risks and a potential property crisis, there are also bright spots such as the growth of the new energy and technology sectors that could boost the economy.
Policymakers expect slower growth in China, potentially below 4%, as the country transitions to a consumption-driven economy, which could have a negative impact on the global economy and alleviate inflationary pressures.
The International Monetary Fund (IMF) plans to advise China to address issues such as weak domestic consumption, the troubled real estate sector, and local government debt, in order to boost both Chinese and global growth, according to IMF Managing Director Kristalina Georgieva. The IMF will urge China to shift its growth model away from debt-driven infrastructure investment and real estate and focus more on domestic consumption. China's aging population, falling productivity, and problems in the real estate sector are factors hindering its growth rate. The IMF is set to release new global growth forecasts, reflecting concerns about low GDP growth worldwide, with the United States being the only major economy to have recovered pre-pandemic levels. China's growth rate is crucial for both Asia and the rest of the world, given its significant contribution to global growth. However, there is a trend of some outflow from China, which needs to be monitored.
China is unlikely to devalue its currency, the yuan, despite concerns that it could do so to boost exports, as such a move would risk intensifying capital flight and tightening financial conditions, according to the Institute of International Finance. Instead, the focus will be on domestic easing measures to maintain steady growth, although there is the challenge of balancing the yuan's stability against the strengthening US dollar and other major currencies.
Signs of improvement in China's economy, such as improving credit demand and easing deflationary pressures, may not be enough to stabilize the economy due to bigger concerns of decreasing affordability, tight wages, and rising costs that have not been addressed. A comprehensive policy revamp may be necessary for China's economy to recover.
China's credit is expanding rapidly, with total social financing increasing by over 3 trillion yuan in August, mainly driven by government financing, indicating positive signs of economic stabilization and recovery from the slump in the second quarter. Additionally, recent policy measures, particularly in fiscal and property sectors, are expected to further stimulate the economy.
Treasury Secretary Janet Yellen states that U.S. growth needs to slow to its potential rate in order to bring inflation back to target levels, as the robust economy has been growing above potential since emerging from the COVID-19 pandemic. Yellen also expects China to use its fiscal and monetary policy space to avoid a major economic slowdown and minimize spillover effects on the U.S. economy.
China will accelerate the introduction of policies to consolidate its economic recovery, focusing on deepening reforms and further opening up, after the economy showed signs of stabilizing, according to state media.
China's room for further monetary policy easing is limited, and it should focus on structural reforms and encouraging entrepreneurship rather than relying solely on macroeconomic policies to revive economic growth, according to a central bank adviser.
China's economic growth appears to be slowing down, with issues such as an aging population and a collapsing housing sector leading to speculation that the country's economic miracle may be coming to an end, while its diplomatic strategies have also caused strain on international relationships.
China is facing a "grinding" economic slowdown with a narrow path for policymakers to prevent further decline, as its property sector and growth rate enter into structural decline and stimulus measures can only partially offset the weakening consumption and investment. However, it is unlikely to experience a Japan-like stagnation but rather a "Sinification" scenario with 3%-4% GDP growth over the next few years.
China's economic slowdown, driven by a real estate crisis and prolonged Covid-19 measures, is raising doubts about its status as the largest economy in the world by 2030, while India is emerging as a promising economic powerhouse and attracting significant investments.
China's economic growth this year may be as low as 2 percent, half of what the International Monetary Fund predicts, due to problems in the property sector, weak foreign direct investment, and other structural issues, according to Daniel Rosen of the Rhodium Group. The IMF has forecasted 5.2 percent growth for China, but Rosen believes growth above 3 percent is unlikely in the medium term. Additionally, concerns are rising that China's economic challenges could hinder global growth.
China's economic malaise is attributed to a failure to implement necessary reforms, with structural threats to stability increasing and growth expectations diminishing, according to a report by Rhodium Group and the Atlantic Council, which warns that the country's goal of becoming the world's largest economy may be delayed.
China's economy is expected to reach its 2023 growth target, with a 5.1% GDP growth predicted for the fourth quarter, but further countercyclical policies are still needed to ensure long-term stability.
The IMF predicts that the world economy will grow at a slower pace of 2.9% in 2024 due to ongoing risks from higher interest rates, the war in Ukraine, and the eruption of violence in the Middle East, highlighting the need for tight monetary policy to combat inflation.
The U.S. economy is growing faster than expected, with the International Monetary Fund upgrading its growth forecast due to strong business investment, worker shortages, and government spending, while the global economy faces a mixed recovery with slower growth in the euro area and China.
China's weak economic recovery and the risks associated with its property crisis are likely to impact Asia's economic prospects, according to the International Monetary Fund (IMF), leading to a cloudier outlook for the region and potential spillover effects on commodity-exporting countries with close trade links to China. The IMF revised its growth estimate for Asia down to 4.2% for 2024, and emphasized the need for central banks in the region to exercise caution in cutting interest rates due to sticky core inflation and other global factors such as the Middle East conflict. Additionally, the IMF warned that Japan's normalization of monetary policy could have significant global implications.
China's economy is expected to slow in the third quarter due to weakened demand, but increased government support may help Beijing achieve its full-year growth target.
The Chinese economy is expected to stabilize in the coming months with the implementation of stimulus measures, but economic growth will be slower in the long run as authorities focus on addressing structural issues such as debt and property market downturns.
The International Monetary Fund (IMF) warns that China's weak economic recovery and the risk of a prolonged property crisis could negatively impact Asian economies, especially those that export raw materials to China, while the strength of the U.S. economy provides less support to the region due to its service industry-focused growth. Additionally, the IMF highlights the potential impact of Japanese financial policy changes on other countries, particularly if further actions are taken by the Bank of Japan.
China's economy is expected to have slowed in the third quarter due to weak demand, but increased stimulus measures could help the country reach its full-year growth target. GDP growth is predicted to be 4.4%, down from 6.3% in the previous quarter, and while recent data shows some stabilization, more measures may be needed to support economic activity.
China's economy has regained momentum in the third quarter, with GDP expanding by 4.9% from a year ago, putting Beijing's annual growth target of around 5% within reach, although challenges such as the real estate sector and an aging population remain.
China's economy grew at a faster pace than expected in Q3, with GDP increasing by 4.9% year-on-year, indicating that recent stimulus measures are starting to have a positive impact on the country's recovery.
The U.S. economy is surpassing China's growth as U.S. retail and industrial data continue to exceed expectations, leading to concerns about inflation and potential interest rate hikes by the Federal Reserve, while energy prices soar and tensions rise in the Gaza-Israel conflict.
China is making efforts to transition to a consumption-centered economy to boost domestic consumption and increase income levels, according to investment guru Fang Fenglei, who believes it could take a decade for the process to fully unfold. The government aims to increase affordable housing for citizens and address issues such as local government debts and the discrepancy in interest rates between the US and China.
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