China economics
Fathom is a world-leading expert on China in a global context. China matters for both policymakers and investors. From AI to climate and from demographics to debt, the biggest questions facing the world are all playing out there.
After decades of phenomenal growth, China is:
- The world’s second largest economy, in US dollars
- The world’s largest emitter by volume of greenhouse gases
- The most common trading partner for the most countries
- The world’s largest official creditor
With its autocratic government structure, its quest for global influence and its comparative opacity to Western economies, China’s rise is the geopolitical event of this generation. US-China relations are frosty as the world’s two superpowers struggle for ‘durable co-existence’ while competing economically.
At Fathom we offer our clients unique insight into China, beyond the official statistics. For more information about our services or to discuss your needs and how we can help, get in touch with Joanna Davies, Chief Commercial Officer.
We now offer a China Subscription Service for clients needing more detailed, bespoke insight into what is happening in China today
Our services
Bespoke consultancy
Much of our work is bespoke consultancy, answering specific queries for clients in government and financial management. That invariably requires designing new approaches and creating unique datasets to address complex problems, casting light on otherwise shadowy areas of China’s economy.
We scrutinise the existing data, and where it is lacking, we either improve it or create a new dataset entirely. Our findings are then summarised in plain, jargon-free English and delivered in a format that works best for you, whether that be a dashboard, presentation or written report.
Data, models, tools
Unexamined data are not worth looking at – especially when it comes to China, where official data is often a less than useful guide to the true state of affairs. Fathom’s data, models and tools are the result of decades of dedicated research and consultancy work by our team of experts. These can be tailored and applied to your questions as part of our bespoke consultancy offering, but recognising that sometimes you need instant insight, direct access to our proprietary data, models and tools is also available upon request.
Capital Flows Tracker
Fathom’s world-leading Capital Flows Tracker sheds light on China and Hong Kong’s true investment patterns and strategic motivations, at a time when China faces increased scrutiny over its overseas acquisitions. The Tracker accurately monitors China and Hong Kong’s financial footprint since 2005 by reconciling a range of diverse datasets. It disaggregates capital flows into M&A and greenfield investment, and is available bi-laterally and by sector. It includes the following details for each deal: country, company, sector, target address, deal status and deal value — including Fathom’s estimates where that information is not publicly available. Data are updated twice a year.
Click here to view our Introduction to the China Capital Flow Tracker animation.
Centrality Tracker
The Centrality Tracker provides a comprehensive measure of the ties binding countries to the key economic powerhouses — China, the EU and the US. The tool covers more than 150 countries, which together account for more than 95% of global GDP. It includes detailed variables on trade, finance, commodities and development. The Tracker identifies underlying economic relationships since 2005, outperforming traditional macroeconomic models when assessing international spillovers from economic shocks such as COVID-19. It also casts new light on a variety of questions, such as: What is the size of, and sensitivity to, China’s economic and financial footprint in Africa? Is Latin America more closely tied with the US, EU or China, and what has changed?
Engagement Scores
Fathom’s comparative measure shows where and how US and Chinese engagement overseas is changing and whose influence is greater. It can also be used to predict a country’s likely alignment in a future geopolitical dispute.
Tensions are high and rising between the US and its allies on the one hand and China on the other, and countries in the Indo-Pacific are in the eye of the ‘de-risking’ storm. Fathom has combined information from more than 200 variables to measure US and Chinese engagement with the Indo-Pacific countries since 2000. Engagement is measured overall and over five dimensions: cultural, financial, military, political and trade. From these engagement scores we compare the relative influence of each of the two great powers, delve deeper into the nature of their engagement with each country, and even deduce the country’s likely alignment in case of a future geopolitical dispute. Fathom’s work reveals that US engagement with the Indo-Pacific remains higher than China’s, but that the gap has closed significantly.
Engagement Scores are also available for Africa.
Geopolitical Alignment Tracker
Our Geopolitical Alignment Tracker assesses how likely a country is to align with either the US or China in the event of a dispute between the two powerhouses, with four fundamental drivers influencing that choice: trade ties, financial ties, military ties and political freedoms.
The Tracker is trained on the observed behaviour of countries in 24 previous geopolitical disputes, such as bans of Huawei technology and the sanction of Russia since its invasion of Ukraine, rather than merely on voting patterns at the UN. Based on Fathom’s analysis, we are able to sort more than 150 countries into groups: US-leaning, Chinese-leaning and non-aligned.
RiCArdo
Originally intended to monitor and measure China’s progress in each of the nine high-tech industries specified under President Xi’s Made in China 2025 (MIC 2025) plan, Fathom’s RiCArdo tool now provides a detailed database of international trade flows in the MIC 2025 sectors since 2003. It covers more than 200 countries, regions or territories, which can be ranked by absolute trade flows in US dollars, by market share or by revealed comparative advantage (RCA). Using RiCArdo, we can assess which countries it would impact most if China succeeded in its MIC 2025 plan. But for now, we find that China has only made limited progress in upgrading its vast manufacturing base since 2015, with its high-tech export share still lagging well behind Japan, Germany and the US on this measure. That’s not to say that it hasn’t gained market share, though: it has, and at the expense of the US.
Fathom’s China model
The model allows the user to explore the effect on the Chinese economy of different domestic and external shocks, such as a domestic banking crisis. It can map the likely impact of Chinese policy choices, such as rebalancing the economy towards consumption and away from investment; and also of external policy moves — e.g., to cut China out of global supply chains in strategically key sectors. The model calculates the impact of these policy changes on the main macroeconomic and financial variables with a horizon out to 2040. It contains data at a quarterly frequency covering more than 110 variables.
The model is an updated version of a tool Fathom originally built in 2014, to explore the impacts of policies designed to help the Chinese economy to rebalance towards consumption. The key innovation is that the model includes Fathom’s own proprietary measure of Chinese GDP, the CMI, split into Fathom’s estimated expenditure and output components. It has recently been used to explore more realistic scenarios, such as a coordinated de-risking, a housing market slump, or a scenario in which China continues to acquire key technology that results in a better long-term outlook.
China Subscription Service
We are in an era of weaponised interdependence, when China’s ties with the rest of the world are right in the crosshairs. Over the past decade we have built a suite of tools that monitor the extent of those ties, identifying what they imply for future geopolitical alignment and possible economic leverage. This depth of understanding, backed by data, sets Fathom apart in a world of growing opacity and tension.
Fathom’s China Subscription Service offers unique insights that go beyond the headline numbers, detailing how China is forming connections and acting out its ambitions in the areas that matter most to you. The service is more than our analysis, it provides a forum for debate and strategic conversation. We will not merely react to your questions, but proactively share tailored insight and reports. In addition to quarterly meetings, subscribers have access to Fathom on-call: the option to put China-related questions to our analysts and receive a timely, expert response.
TTX Service
- Tackle the problems you face with interactive exercises
- Use cutting-edge technology and proprietary data
- Explore the trade-offs, deal with uncertainty
- Play your cards and see what happens!
Bringing analysis to life
Our table-top exercises (TTXs) are a unique and immersive way for groups to explore the risks that matter to their organisation. We design bespoke scenarios for public- and private-sector teams to move through, using cutting-edge technology and proprietary data. You act as the decision-maker, navigating uncertainty and weighing up the trade-offs, while we show you the dynamic impact of your choices in real time.
Case study
China-US AI competition: a TTX examining the geopolitical consequences of AI, depending on whether countries opt for labour-supporting or labour-replacing technology
Global Outlook
The China-focused section of our quarterly Global Outlook is informed by our extensive suite of proprietary datasets, models and tools. We deliver these unique insights through our quarterly presentations and written research pieces, examples of which are available below. Subscribers to this service also receive invitations to roundtables and events, hosted by Fathom.
Geoeconomic implications of a fractured global economy
What are the risks, and where are the opportunities?
Fathom’s report considers the implications of a divided global economy, looking particularly at global trade. We assess how exporters are likely to align in a fractured world, and analyse where supply vulnerabilities could arise, how they could be countered and at what cost.
Case studies
Insights
Listen to our podcast
Fathom: In Conversation is our economics podcast.
Fathom’s ten-part podcast series, The rise of China, is essential listening for anyone who wants to understand more about the Middle Kingdom. Each short episode features conversations with Fathom’s economists who share unique insights from their research to tell a well-rounded story of China’s past, present and potential future.
Get in touch
For more information about our China economics services or to discuss your needs and how we can help, please fill out the form below.