macro outlook
November 22, 2019
IMG 2950

PPI Deflation May Be Worrisome

Major economic indicators are still mostly falling in October. Industrial output rose 4.7% y/y, comparable to July and August. Investment rose 3.4% y/y, down 1.3 pps from Q3. Retail sales of social consumption goods rose 7.2% y/y, and its real growth rate was 4.9% y/y, down 0.4 and 0.8 pps from Q3 respectively.

In October, exports rose 2.1% y/y, and imports fell -3.5% y/y, down1.8 and 0.6 pps from Q3. Export to US fell -13.8% y/y, but up 6.2 pps from September. Trade surplus is enlarging dramatically, and rose 36.6% y/y.

Since July, societal financing scale was slowing, and rose only 0.8%…

September 24, 2019

Financial Market Opens Further

Growth is slowing further. In August, industrial output was up 4.4% y/y, down 0.4 pps from July, while investment rose 4.2% y/y, down 1.3 pps from Q2.

Retail sales of social consumption goods were up 7.5% y/y in August, down 1.1 pps from Q2. The indicator’s real growth rate was 5.6% y/y, down 0.9 pps from Q2. Exports were stable, but the import growth rate was plunging. Exports were up 2.6% y/y. Yet recent export growth was rather volatile. The July-August combined growth rate was 5.9% y/y, almost the same as in Q1 and Q2. The much lower export growth to the United States was compensated for…

June 22, 2019

More Steps toward Financial Openness with London-Shanghai Connect

Growth is facing downward pressure. Industrial output rose 5% y/y, down 0.4 pps from April, reaching a new low rate. Investment rose 4.4% y/y, down 1.3 pps from April. The decrease of investment growth rate is mainly affected by state investment because of fiscal deficit pressure. State investment rose 5.6% y/y in May, down 4.2 pps from April. In May, fiscal revenue fell -2.1% y/y, down 7.4 pps from January-April, putting further constraint on state investment. Real estate cooled further.

Retail sales of social consumption goods were up 8.6% y/y in May in nominal terms. The adjusted growth…

March 24, 2018

Growth Targeted at About 6.5%

Prime Minister Keqiang Li announced during a March 5th address to the People’s Congress of Beijing that China’s growth target for 2018 would be about 6.5%, the same as in 2017, when growth reached 6.9%. The yuan will be “basically stable” at a reasonable level, Li also predicted. More local government debt will be cut, but not at the cost of infrastructure. Moreover, reducing financial risk will be key for the regulatory agency, an emphasis further confirmed by new Central Bank governor Gang Yi, who took office after Xiaochuan Zhou’s 13 years of service.

Only three days after the People’s…