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INSIGHT


Five themes facing China in the year of the Ox

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A vaccine for COVID-19, inflation, new US President Joe Biden, bubbles and new energy.

Those are the five eclectic themes that will define China’s economy in the New Year according to ANZ Research.

Speaking on video, ANZ’s Chief Economist, Greater China Raymond Yeung said the market had high hopes for China’s economic prospects in the coming year.

“However, the Biden era has come, and [fear of an] asset bubble is getting bigger and bigger,” he said. “Behind the optimism is the risk of policy change.”

Yeung made the comments on a panel with ANZ Senior Economist Greater China, Betty Wang and Senior China Strategist Zhaopeng Xing. You can watch a video of the discussion below.

Wang said the success of the various COVID-19 vaccines was the best hope for global economic recovery this year.  

“The large-scale vaccination in 2021 will undoubtedly drive China's export demand,” she said. “But at the same time, the boost of the global economy may put the withdrawal of loose monetary policy on the agenda, which in turn will affect China's financial markets.”

Xing said if the vaccine rollout is a success, inflation could become a major unexpected variable in 2021.

“However, since China's monetary policy is very focused on employment, even if inflation exceeds expectations, it may not necessarily cause the central bank to tighten its monetary policy,” he said. “However, the price increase of industrial products in China will have a significant spillover effect. “

Watch to find out more on the video above.

The above video was shot ahead of the release of the “China in the Year of the Ox: Five Keywords” report from ANZ Research. You can access the full report HERE.

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