Investment Institute
Macroeconomic Research

AXA IM Talk on Asia & China Market: A rocky start for China in the year of the Tiger

  • 28 February 2022 (5 min read)


  • China’s economy is a ‘mixed picture’ so far in 2022
    • Housing market remained in dire straits
    • The weak property market has taken its toll on industrial activity
    • A notable increase in passenger travel volumes this year during CNY
    • Household spending remains weak
  • We see policy easing starting to penetrate in the real economy
  • We expect further easing measures after next month’s National People’s Congress meetings

Please find the full script below:

Hello. Welcome to our monthly video series. My name is Aidan Yao. I am the Senior Emerging Asia Economist at AXA Investment Mangers.

After staging a fairly decent recovery in the final quarter of 2021, China’s economy got off to a pretty rocky start in the year of the Tiger.

Official activity data for January and February won’t be released until the middle of March to smooth out the Chinese New Year effect, leaving the market right now somewhat ‘flying blind’ when it comes to gauging the economic pulse.

To fill the data gap, we rely on some high-frequency and third-party indicators, which showed a rather mixed picture for the Chinese economy so far in 2022.

On the one hand, the housing market remained in dire straits. Property sales in major Chinese cities fell by 30% year-on-year in January due to partly a high base, but also very weak purchase intentions as home buyers stayed on the sidelines waiting for prices to drop further.

The weak property market has also taken its toll on industrial activity, with the decline in manufacturing PMI probably also exacerbated by the pollution controls ahead of the Winter Olympics.

In the consumer sector, a notable increase in passenger travel volumes this year during the Chinese New Year suggests that Beijing’s more lenient management under its “dynamic zero-COVID strategy” has struck a better balance between virus control and social mobility than last year.

But despite taking more trips, households were still very reluctant to open their wallets, with tourism and box office revenue growth either flat or slightly lower than 2021. 

So against the soft growth backdrop, policies have started to do more heavy-lifting. After repeatedly signalling a policy pivot to stabilising growth, various monetary and fiscal policies have been relaxed while the property curbs have also been fine-tuned.

These moves have resulted in a very strong credit growth print last month, suggesting that Beijing’s policy easing is finally starting to penetrate in the real economy.

All of these developments are consistent with our view that Beijing is serious about stabilising economic growth in a politically sensitive year. But to bolter growth back to trend, we think more policy supports are needed. Hence, we see further easing measures to be rolled out after next month’s National People’s Congress meetings.


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