Key Takeaways

  • China’s November data releases provided further evidence that policy easing to date is gaining traction.
  • Month-over-month gains in services and industrial production were strong, helping push our China Activity Indicator slightly higher. 
  • The property sector remains a major concern. And, while new starts have stabilised since June, other key metrics now point to a continued slide, rather than the tentative stabilisation indicated last month. A faster pace of price falls also implies that households are staying on the sidelines. 
  • Policy continues to take a targeted and incremental approach. Downpayment criteria have been eased in some Tier 1 cities, while the PBOC provided another larger-than-expected liquidity injection in December.
  • The Central Economic Work Conference (CEWC) concluded with little indication of a major change in policy direction. But the authorities seem to be recognising the need for central government assistance and a coordinated approach to ensure stability while addressing local government debt risks. This more balanced approach suggests that the fiscal backdrop should be marginally more supportive. 
  • Overall, we remain somewhat cautious about the Year of the Dragon and our 2024 growth forecast remains at 4.4%. 

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