East Asia Econ

China – M1 growth slowing again

The continued slowdown in credit growth is led by households and CGBs – corporate borrowing has been firm. But the M1:M2 ratio is slipping again, warning that the domestic dynamic that had contributed to lessening deflation and a less dovish PBC is now once again fading.

Paul Cavey

Jul 16, 2026 • 2 min read

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East Asia Today

Longer notes on the Q2 data release in China, and an outlook for Korea before tomorrow's BOK meeting. In addition, services output and machine orders point to the recent lift in economic momentum in Japan sustaining, and terms of trade data for Korea suggest very strong income growth again in Q2.

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Korea – rates to rise, but how hawkish?

The BOK discussion tomorrow should have two levels, the usual analysis of growth, CPI, housing, and the KRW, but also analysis of how the huge semi terms of trade shock affects medium-term economic prospects. The first justifies rate hikes. I think the second argues for more hawkishness still.

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China – still weak, but better in June

Q2 GDP data were weak, but the damage was done at the start of the quarter, with a clear improvement in industrial momentum thereafter. With the deflator also positive for the first time since 2022, that's likely enough for policymakers, even though domestic demand remains a mess.