China – Inside the Great Firewall
2012-07-05 14:50:20
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•Google searches provide clues about economic thinking in China
•Concern about an economic slowdown is on the rise
•Inflation worry has fallen; everyone is wealth-management-product crazy
Today we are on the ground in China's virtual world. What China's netizens search for online can tell us a bunch of interesting stuff about their expectations, concerns and even, possibly, their current and future behaviour. We pioneered the use of Google searches for understanding China's economy in 2009 (On the Ground, 23 June 2009, "China – The online wisdom continues"). Since then, Google has suffered some setbacks in China, but we understand that some 12-13% of Mainland searchers still use the service. As before, our results are based on analysis of Google-facilitated searches done in simplified characters within Mainland China. Our figures show the rise and fall of the frequency of a search term in relation to its peak, which is set at 100. Our key findings are:
1.Concern about the economic slowdown is on the rise; few are thinking about a recovery. But people do not think of this slowdown as a 2008-style crisis.
2.Policy stimulus by Beijing has been noticed, but has not generated as much of a splash as in 2008-09.
3.Inflation concern is falling rapidly; there is little interest in pork prices these days. This should give Beijing more space to loosen policy.
4.Searches for "wealth" show a strong correlatation with spending. Google searches suggest that as people get wealthier (and presumably search for what they should do with it), they want to spend more on buying cars, travelling, and studying or emigrating abroad. Beijing now faces the challenge of generating wealth without inflating the housing market again.
The economic implications of online wisdom
Concerns about the economic slowdown are running high. As Figure 1 shows, the number of searches for the term "economic slowdown" has surged recently. Searches for "economic recovery" are sliding. That said, most people do not think of the current slowdown as another 2008-style crisis. As Figure 2 shows, there is a big difference between searches for „China economic crisis‟ now and in 2008.
Moves to stimulate by Beijing have been noticed, as indicated in Figure 3. This is how policy should work, via affecting people‟s expectations. The impact has been smaller than in 2008-09, as the severity of the current economic crisis is less than then, but we do expect more loosening from Beijing in H2-2012: three more cuts to the required reserve ratio (by 50bps each) and two more 25bps interest rate cuts (see On the Ground, 14 June,2012, "China – Wisdom from our China crowd"). It is possible that these moves will come around the time of the Q2 GDP release (July 13), which we expect to be 7.6%.
Likely due to a mixture of policy easing and the continued shrinking of the trade surplus, expectations for Chinese yuan (CNY) appreciation have fallen (Figure 4). We also checked searches for "CNY depreciation", but there was no sign of increased interest in the idea, despite recent market action. We believe that when the global economy is back on a firmer footing, likely towards year-end, the CNY will continue to appreciate moderately, driven by surpluses in both the current and capital accounts. We forecast the USD-CNY exchange rate to appreciate to 6.19 by end-2013 (from around 6.36 on June 25; see On the Ground, 26 June 2012, "China – Corporates and the CNY").
Figure 5 suggests that people are not expecting further policy tightening in the housing market. There has been some interest in policy easing, but so far such searches are not common. We expect Beijing to continue with its nationwide buying restrictions to counter speculative behaviour, but first-time buyers are seeing a more accommodative policy stance at the local level (On the Ground, June 28, 2012, "China – Regain some hope, all ye who enter here!").
Inflation concerns have receded, as Figure 6 shows, in line with our long-held view that inflation is not an issue for 2012 (see On the Ground, 15 December 2011, "China – A year of not worrying about inflation"). This should give greater leeway to Beijing to loosen policy to support growth.
This time Beijing wants to boost growth by relying more on consumption. But this is easier said than done. Figure 7 shows that as wealth increased in 2007 (a time when many urbanites felt richer because of the equity market and housing boom, as well as strong overall growth), people wanted to spend more. Searches for buying cars,overseas travel and study abroad all increased. These days, however, Google search results suggest that urban China is feeling, if not poor, then less flush. Interest in buying a car is holding up, but interest in overseas travel is down. Folks seem very interested in wealth-management products – driven by a desire for wealth preservation (see On the Ground, 22 February 2012, "China – Spreading the wealth"). As we show in Figure 8, search interest in wealth-management products is spread over many cities, not just Tier 1.
We also note a steady rise in interest in gold during the 2008-09 crisis that peaked in mid-2011, with a mild slackening since then, shown in Figure 9.
Finally, we had a look at searches for information on "emigration" – there has been a spate of stories of increasing outflows of people. But we did not see any significant uptick. Maybe those who wish to emigrate have other channels of communication than Google.
•Concern about an economic slowdown is on the rise
•Inflation worry has fallen; everyone is wealth-management-product crazy
Today we are on the ground in China's virtual world. What China's netizens search for online can tell us a bunch of interesting stuff about their expectations, concerns and even, possibly, their current and future behaviour. We pioneered the use of Google searches for understanding China's economy in 2009 (On the Ground, 23 June 2009, "China – The online wisdom continues"). Since then, Google has suffered some setbacks in China, but we understand that some 12-13% of Mainland searchers still use the service. As before, our results are based on analysis of Google-facilitated searches done in simplified characters within Mainland China. Our figures show the rise and fall of the frequency of a search term in relation to its peak, which is set at 100. Our key findings are:
1.Concern about the economic slowdown is on the rise; few are thinking about a recovery. But people do not think of this slowdown as a 2008-style crisis.
2.Policy stimulus by Beijing has been noticed, but has not generated as much of a splash as in 2008-09.
3.Inflation concern is falling rapidly; there is little interest in pork prices these days. This should give Beijing more space to loosen policy.
4.Searches for "wealth" show a strong correlatation with spending. Google searches suggest that as people get wealthier (and presumably search for what they should do with it), they want to spend more on buying cars, travelling, and studying or emigrating abroad. Beijing now faces the challenge of generating wealth without inflating the housing market again.
The economic implications of online wisdom
Concerns about the economic slowdown are running high. As Figure 1 shows, the number of searches for the term "economic slowdown" has surged recently. Searches for "economic recovery" are sliding. That said, most people do not think of the current slowdown as another 2008-style crisis. As Figure 2 shows, there is a big difference between searches for „China economic crisis‟ now and in 2008.
Moves to stimulate by Beijing have been noticed, as indicated in Figure 3. This is how policy should work, via affecting people‟s expectations. The impact has been smaller than in 2008-09, as the severity of the current economic crisis is less than then, but we do expect more loosening from Beijing in H2-2012: three more cuts to the required reserve ratio (by 50bps each) and two more 25bps interest rate cuts (see On the Ground, 14 June,2012, "China – Wisdom from our China crowd"). It is possible that these moves will come around the time of the Q2 GDP release (July 13), which we expect to be 7.6%.
Likely due to a mixture of policy easing and the continued shrinking of the trade surplus, expectations for Chinese yuan (CNY) appreciation have fallen (Figure 4). We also checked searches for "CNY depreciation", but there was no sign of increased interest in the idea, despite recent market action. We believe that when the global economy is back on a firmer footing, likely towards year-end, the CNY will continue to appreciate moderately, driven by surpluses in both the current and capital accounts. We forecast the USD-CNY exchange rate to appreciate to 6.19 by end-2013 (from around 6.36 on June 25; see On the Ground, 26 June 2012, "China – Corporates and the CNY").
Figure 5 suggests that people are not expecting further policy tightening in the housing market. There has been some interest in policy easing, but so far such searches are not common. We expect Beijing to continue with its nationwide buying restrictions to counter speculative behaviour, but first-time buyers are seeing a more accommodative policy stance at the local level (On the Ground, June 28, 2012, "China – Regain some hope, all ye who enter here!").
Inflation concerns have receded, as Figure 6 shows, in line with our long-held view that inflation is not an issue for 2012 (see On the Ground, 15 December 2011, "China – A year of not worrying about inflation"). This should give greater leeway to Beijing to loosen policy to support growth.
This time Beijing wants to boost growth by relying more on consumption. But this is easier said than done. Figure 7 shows that as wealth increased in 2007 (a time when many urbanites felt richer because of the equity market and housing boom, as well as strong overall growth), people wanted to spend more. Searches for buying cars,overseas travel and study abroad all increased. These days, however, Google search results suggest that urban China is feeling, if not poor, then less flush. Interest in buying a car is holding up, but interest in overseas travel is down. Folks seem very interested in wealth-management products – driven by a desire for wealth preservation (see On the Ground, 22 February 2012, "China – Spreading the wealth"). As we show in Figure 8, search interest in wealth-management products is spread over many cities, not just Tier 1.
We also note a steady rise in interest in gold during the 2008-09 crisis that peaked in mid-2011, with a mild slackening since then, shown in Figure 9.
Finally, we had a look at searches for information on "emigration" – there has been a spate of stories of increasing outflows of people. But we did not see any significant uptick. Maybe those who wish to emigrate have other channels of communication than Google.
我也说两句：
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名家简介
王志浩简介：
渣打银行大中华区研究主管。
他领导的中国经济研究团队荣获Emerging Markets 杂志2011 年最佳分析奖。2009 年末，王志浩登上经济观察报年报特刊“我们的一代新人”，并被誉为“中国预言家”。2011 年他荣获“上海滩国际金融菁英人物”学术奖。
王志浩获伦敦政治经济学院政府系博士学位。大学本科阶段在剑桥大学度过，并获一级荣誉学位。他曾在复旦大学和深圳证券交易所从事访学研究。
加入渣打银行之前，王志浩曾先后任英国查达姆研究所（Chatham House，即英国皇家国际事务研究所）亚洲部主管、《经济学人》旗下《The World in...》杂志副主编。在此之前，他在肯尼亚和莫桑比克的乡村做过为期两年的志愿援助与教育工作。
他的第四本专著《大国经济之路》（中文版，中信出版社）已于2010 年1 月出版。他还经常为《经济观察报》、《21世纪经济报道》、《新财富》、《第一财经日报》，以及《华尔街日报》中文网等报刊杂志撰写宏观经济分析文章。博文分类
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