M UpdateChina Economics | Asia PacificMacro Webcast: New Year Resolution: Reflation, Not AusterityMorgan Stanley Asia LimitedRobin XingChief China Economist Robin.Xing@morganstanley.com +852 2848-6511 Jenny Zheng, CFAEconomist Jenny.L.Zheng@morganstanley.com +852 3963-4015 Morgan Stanley appreciates your support in the 2024 Institutional Investor All-Asia Research Team Survey. Request your ballot here. Related reports:China Musings: New Year Resolution: Reflation, Not AusterityChina Economics: Longest and Deepest Deflation Since 1998For important disclosures, refer to the Disclosure Section, located at the end of this report.January 14, 2024 08:35 PM GMTM Update2M UpdateMorgan Stanley Research31Some Stabilization in Trade Labor-intensive consumer goods exports further stabilizedImproved imports led by commodities and tech processing tradeSource: China Customs, Morgan Stanley Research85909510010511011512090100110120130140150160170180190Dec-17Jun-18Dec-18Jun-19Dec-19Jun-20Dec-20Jun-21Dec-21Jun-22Dec-22Jun-23Dec-23Seasonally Adjusted, Jan-2017=100Tech-related ImportsImports of Infrastructure-related Commodities-RS10,00015,00020,00025,00030,00035,00040,00045,0002005200620072008200920102011201220132014201520162017201820192020202120222023Exports of Labor-intensive Consumer Goods, seasonally adjusted, US$mnReversal of post-Covid market share gain has been largely completedM Update42But Domestic Demand Remains WeakSoftening credit demand defying strong government bond financingLongest and deepest deflation since 1998Source: PBoC, NBS, Morgan Stanley Research estimates (E)1Q24E：-1.0-4-20246810Mar-97Mar-98Mar-99Mar-00Mar-01Mar-02Mar-03Mar-04Mar-05Mar-06Mar-07Mar-08Mar-09Mar-10Mar-11Mar-12Mar-13Mar-14Mar-15Mar-16Mar-17Mar-18Mar-19Mar-20Mar-21Mar-22Mar-23Mar-24GDP Deflator (%)2Q98-4Q99: 7 quarters2Q-3Q09:2 quarters3Q-4Q15:2 quartersSince 2Q23:3 quarters2Q20:1 quarter2Q98-4Q99: 7 quarters2Q-3Q09:2 quarters3Q-4Q15:2 quartersSince 2Q23:3 quarters2Q20:1 quarter8%9%10%11%12%13%14%Dec-18Dec-19Dec-20Dec-21Dec-22Dec-23YoYBroad Credit GrowthBroad Credit Growth excl. Govt.Bond FinancingM UpdateMorgan Stanley Research53Sluggish Household Sentiment on HousingOnly 18% of our surveyed respondents have home purchase plans Risks of salary cuts/job losses remained top concernsSource: AlphaWise, Morgan Stanley Research82%1%3%7%2%2%2%81%1%4%7%4%2%1%82%1%3%7%3%1%2%82%1%2%5%4%3%2%0%10%20%30%40%50%60%70%80%90%Unlikely/unsureto purchase ahomeExtremely next6 monthsExtremely likenext 12 monthsExtremely likelynext 2-3 yearsExtremely next4-5 yearsExtremely likelymore than 5years from nowDon’t knowMost Likely Timeframe of Home Purchase(among total sample)9/25-28, '2310/30-31, '2311/28-12/1, '2312/27-29, '2336%32%24%0%10%20%30%40%50%3/11-14, '203/18-21, '203/25-28, '204/01-03, '204/08-11, '204/15-18, '204/28-30, '205/12-14, '205/26-28, '203/23-26, '223/29-4/1, '224/12-15, '225/25-29, '226/24-28, '227/25-28, '2212/28-31, '221/29-31, '232/24-28, '233/28-4/1, '234/25-28, '235/26-29, '236/26-29, '237/27-31, '238/28-31, '239/25-28, '2310/30-11/1, '2311/28-12/1...
