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China’s macro data for August published so far suggest that the Chinese economy has stabilised, according to Arjen van Dijkhuizen, Sr. Economist at ABN AMRO.

Key Quotes

“Growth of industrial production picked up marginally to 6.1% yoy (July: 6.0), while retail sales growth rebounded to 9.0% yoy (July: 8.8%). At the other hand, fixed investment growth dropped to a new low of 5.3% yoy (July 5.5%). The slowdown of fixed investment is completely driven by state-led investment.”

“Growth of state led investment dropped to an historic low of 1.1% yoy, driven by a further slowdown of infrastructure investment. This shows that the recent easing of fiscal policy has not yet filtered through into activity. Meanwhile, growth of private investment has clearly picked up from the levels seen during 2016-17 and has remained stable at around 8.5% yoy in recent months.”

“The manufacturing PMIs published by NBS and Caixin earlier this month also pointed to stabilisation, although Caixin’s services PMI dropped to 51.5 (July: 52.8). Car production and car sales remained in contraction mode, but the real estate sector shows ongoing robustness with property sales and property investment showing double digit growth.  Bloomberg’s monthly GDP estimate even edge up a bit in August, to 6.8% yoy (from 6.7% in July and August), staying close to the latest official growth number (Q2: 6.7% yoy).”

“Growth of exports and imports comes down, but remains firm

Both export and import growth moderated compared to July. At 9.8% yoy, export growth remains above the average of around 7.5% reached in 2017, but below the average of 12.5% in January-July this year. Still, a further stepping up of import tariffs by the US is a key downside risk. That is also reflected in the PMI export subindices, with both Caixin’s and NBS’s version remaining below the neutral 50 mark in recent months. Meanwhile, import growth moderated to 20% yoy in August (July: 27.3%), but that remains a very decent growth pace outpacing the already high average for 2017 (16%) and in line with the average seen for January-July 2018.”


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