Arjen van Dijkhuizen, Senior Economist at ABN AMRO, explains that China’s recent data point to a further gradual weakening of momentum, but there are signs that policy easing is starting to kick in.
Key Quotes
“As we expected, investment growth picked up to 5.8% yoy ytd (September: 5.4%). That mainly reflects the recovery of stated-led investment on the back of fiscal easing policies. State-led investment growth slowed sharply over the past years, after a surge in 2015 when the government stepped up stimulus as China was experiencing ‘wobbles’ at that time.”
“Over the past months, Beijing ordered local governments to issue more special purpose bonds to finance local infrastructure projects, while the banking supervisor cut risk weights for local government bonds.”
“Retail sales slowed to 8.6% yoy (September: 9.2%), the lowest pace in five months. That likely reflects some statistical factors, such as the timing of the mid-autumn festival holidays and possibly some households holding back spending in the run-up to ‘Singles Day’ on 11 November.”
“Meanwhile, industrial production edged up marginally, to 5.9% yoy (September: 5.8%).”
“All in all, Bloomberg’s monthly GDP estimate continued its gradual decline, falling to 6.6% yoy in October. That’s the lowest level since May 2015, but still somewhat above the latest official growth number (Q3: 6.5% yoy).”
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