Linked inTwitterFacebookSubscribe to Halcyon Headlines Feed

Part consultancy, part thinktank, part social enterprise, Halcyon helps you prepare for and respond to personal, organisational and societal change.

Halcyon's forthcoming 52:52:52 campaign on Twitter will help you address 52 issues with 52 responses over 52 weeks.

To be a catalyst is the ambition most appropriate for those who see the world as being in constant change, and who, without thinking that they control it, wish to influence its direction - Theodore Zeldin

What's Happening? - China

blog image


Please see below selected recent intelligence about China. This is a synthesis of major recent developments at corporates, business schools, thinktanks, media, commentators, and other key influencers.


Q3 (July-August-September) 2016 


  • The former chief economist of the International Monetary Fund warned that a slowdown in China is the greatest threat to the global economy, claiming that a "hard landing" for one of the main engines of global growth could not be ruled out.
  • However, China’s industrial profits jumped the most in three years. They rose 19.5% from a year ago to 534.8 billion yuan ($80.2 billion), according to the National Bureau of Statistics. The data suggests further stabilisation in manufacturing and a greater ability of companies to pay off debts.
  • Indeed, China’s economy grew by 6.7% in the second quarter, the same as in the previous three months and a healthier pace than many had expected given the country’s stock market crash and depreciation of the yuan. Investment in infrastructure has surged and personal consumption has been strong.
  • Although there is some suggestion that Chinese private sector is losing confidence in economic prospects, China’s producer price index was its least bad in four years. Government data tracking the cost of manufactured goods out the factory gate showed prices declined just 0.8% through the month of August, indicating that the flagging economy might be stabilizing. Consumer price inflation climbed 1.3%, slightly below July’s increase.
  • Yet China’s July economic data provided more evidence of a slowdown. Investment grew at its slowest pace in more than 16 years in the January-July period. Retail sales in July increased 10.2%, versus a forecast 10.5% and down from 10.6% in June. Industrial output for the month rose 6% from a year earlier, slowing from 6.2% in June and missing the forecast of 6.1%.
  • China’s “One Belt, One Road” project aims to make central Asia more connected to the world, yet even before the initiative was formally announced China had helped to redraw the energy map of the region. However, China is not the only investor in central Asian connectivity. Multilateral financial institutions, such as the Asian Development Bank, the European Bank for Reconstruction and Development and the World Bank have long been investing in the region’s infrastructure. The Kazakh government has its own $9bn stimulus plan, directing money from its sovereign wealth fund to infrastructure investment. Other countries, including Turkey, the US, and the EU have also made improving Eurasian connectivity a part of their foreign policy. 


June 2016






May 2016








April 2016







  • China is facing the difficult task of managing a soft economic landing, after decades of spectacular expansion. Naysayers abound, but never mind them, said McKinsey. China has an advantage that other countries in today’s troubled global economy lack: a clear path forward. If China carries out a sustained, comprehensive effort to raise productivity, it can address its growth challenges, reduce the risks of financial crisis, and complete its transition to a consumption-driven, high-income economy with a large and affluent middle class. If it does, its annual GDP could be an estimated $5 trillion larger by 2030 than it is likely to be if policymakers continue to pursue investment-led growth.





  • China adopted its 13th Five Year Plan last month, outlining its goals, principles and targets for its development through to 2020. The Plan sets an annual GDP growth target of 6.5% over the next 5 years and reflects a move towards domestic consumption, innovation and entrepreneurship in seeking to achieve a more balanced and sustainable economic development. Innovation is not a new theme in China’s 5 year plans, but it has taken on greater significance in this one. “Innovation-driven development” is repeatedly referred to as a new driver for China’s economic growth.The size and increasing global influence of China’s economy means the Plan has significant implications for businesses in China, and around the world.









  • China’s official Purchasing Managers' Index rose to 50.2 in March, up from February's 49 but still only marginally above the 50-point mark separating growth from contraction. The expansion was the first time in nine months adding to hopes that downward pressure on the world's second-largest economy is easing.





March 2016




















February 2016













  • Provincial economies in China that once thrived on the exploitation of their rich natural resources are currently experiencing a protracted slowdown, earned the EIU. A weakening in domestic commodity demand and a subsequent slump in prices have crimped economic activity and exposed structural weaknesses. These provinces will continue to face headwinds in the coming years unless they can implement reforms to diversify their economies - read more.



  • Further significant recent developments: Premier Li Keqiang has said that China will continue its financial reform and will not seek to boost its economy through currency depreciation; China has further loosened controls over investment of Qualified Foreign Institutional Investors (QFII) to further the opening of the domestic capital market; ghost cities which are dotting the Chinese landscape are an eerie reminder of country’s failed ambitions







  • However, the UK Treasury's commercial secretary Jim O'Neill expressed his optimism about China's economic growth despite the world's second largest economy slowed to a 25-year low of 6.9 percent in 2015. China is definitely still on track in terms of its real GDP growth, said O'Neill, who is known for the creation of BRICs acronym. China's 6.9 percent growth is the equivalent to India growing by nearly 35 percent or the United Kingdom growing by nearly 22 percent. So 6.9 percent is the envy of any developed country, he said in an interview.





  • Over the past few months, China has increasingly made headlines in global news, creating a constant stream of articles, background reports and opinion pieces on the state of the economy and the currency. In the midst of all these developments, it may have been challenging to keep an eye on China’s long-term goals, ambitions and initiatives; most notably, the significant efforts China’s leadership is putting into its ‘Going Global’ strategy, of which the ‘Belt and Road’ (B&R) initiative is an integral part. B&R is likely to shape both China’s national economic development strategy and international activities for the years to come and expected to feature prominently in China’s next five-year plan, which will be released this year. This initiative is not only restricted to China, but involves close to 65 countries, covering more than half the world’s population. While B&R is still at an initial stage, PwC's Growth Markets Centre’s (GMC) research and interviews provide preliminary insights into the initiative and the possible implications in China and abroad.  Here is the GMC's latest report on this initiative:




January 2016



  • Strategy& analysis found that China’s markets are largely disconnected from the real economy and are a poor leading indicator. Their total market value represents only about 40% of GDP, and individual retail investors account for as much as 90 percent of daily transactions. In addition, traded stocks are heavily skewed toward the manufacturing and construction sectors, and Chinese firms rely far more on the banking system to raise capital. Nevertheless, all is obviously not well in China. GDP growth has slowed significantly, debt levels are still increasing, and capital efficiency is unacceptably low. At the same time, overcapacity has reached dangerous levels in sectors such as steel, glass, and cement. And although it continues to exercise strong systemic control over the economy, Beijing is rapidly depleting its cash reserves as it tries to prevent the yuan from devaluing too quickly. As a result, most mainstream economists believe that China urgently needs to “rebalance” by implementing structural reforms and moving to a more market-based economy.



  • Forecast economic growth in 2016 is premised on continued monetary and fiscal policy support from the authorities, claimed the EIU. The budget deficit is forecast to widen to the equivalent of 3.2% of GDP in 2016, from an estimated 2.8% in 2015. Meanwhile, the People’s Bank of China (the central bank) is expected to retain its currently accommodative monetary policy stance until the second half of 2017. We do not forecast further cuts to benchmark interest rates, which are already at record lows, but additional loosening of the reserve requirement ratio and ongoing liquidity injections by the PBC are likely.







  • The Where Is the Chinese Economy Heading? session in Davos asked: with a new Five-Year Plan being presented in 2016, how can the world’s second-largest economy shift gears without stalling its growth engine?



  • China's economy grew by 6.9% in 2015, compared with 7.3% a year earlier, marking its slowest growth in a quarter of a century. China's growth, seen as a driver of the global economy, is a major concern for investors around the world. Beijing had set an official growth target of "about 7%" for the world's second-largest economy. Chinese Premier Li Keqiang has said weaker growth would be acceptable as long as enough new jobs were created. But some observers say its growth is actually much weaker than official data suggests, though Beijing denies numbers are being inflated. Analysts said any growth below 6.8% would likely fuel calls for further economic stimulus. Economic growth in the final quarter of 2015 edged down to 6.8%, according to the country's national bureau of statistics.




















December 2015











  • Activity in China's services sector expanded at a slower pace in November as new orders weakened. The Caixin/Markit Purchasing Managers' Index fell to 51.2 in November from a three-month high in October of 52.0. A reading above 50 points signifies growth on a monthly basis, while one below that points to a contraction.New business rose at a slower pace of 51.1 - down from 52.9 in October - showing weaker domestic and external demand while employment in services rose only marginally, with the smallest increase in three months.







  • The latest snapshot of manufacturing activity by the Chinese Federation for Logistics and Purchasing showed activity slipping for the fourth month in a row, falling further below the 50 no-change mark to 49.6 in November from 49.8 the previous month. Economists at ANZ Bank said the data could prompt yet another rate cut from China's policymakers.




November 2015
















October 2015


  • New data out this week sheds some more light on the dynamics of the pressures facing China's industrial sector. Industrial profits are down 1.7% on last year, according to the most recent data - EIU, 29th October 2015






  • China's commodity companies are drowning in a sea of debt" - Business Insider, 21st October 2015





  • PwC's own Economics team launched its monthly Global Economy Watch for October. This month, our economists focused on China’s slowing economy as policymakers manage the rapid cooling of its debt-fuelled property market, and analyse how this poses a major challenge for some economies.


  • "China's new path to sustained growth" argued that there will be increasing demand from China for high-quality services and high-tech products, and China’s outbound investment will be more active. Indeed, especially in trade in services and two-way investment, the possibilities for strengthening cooperation between China and the U.S. are almost limitless - Bloomberg Views



September 2015















August 2015









  • China’s stockmarkets remained turbulent, including a 6% plunge in the Shanghai Composite Index on August 18th - The Economist, 23rd August 2015















  • Indeed, the Chinese government intervened to try to stem the popping of a stockmarket bubble. While the impact on the real economy in the short term is likely to be slight, for the EIU there are two big reasons to be more pessimistic longer-term. The first is that the Chinese leadership firmly stamped their names on the intervention. It looks to be their first major misstep, and could be the precursor to some internal wrangling. The second is what the intervention says about the likelihood of medium-term economic reform: certainly it does not seem to reflect policymakers committed to giving markets a 'decisive' role, as promised in 2013 by the Chinese Communist Party government.