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China’s August activity data were largely mixed as industrial production (IP) growth rose slightly to 6.1% y-o-y from 6.0% in July, retail sales growth picked up to 9.0% from 8.8%, while fixed asset investment (FAI) growth slowed further to a weaker-than-expected 5.3% y-o-y ytd in August, notes the research team at Nomura.

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“Despite the rebound in IP and retail sales growth, we believe the overall economy has continued to slow, and this could worsen in coming months. Money and credit data have also provided mixed messages. On the negative side, M2 growth slowed to 8.2% y-o-y in August from 8.5% in July, outstanding aggregate financing growth slowed to 10.1% y-o-y from 10.3% in July while new loans slid to RMB1,280bn in August from RMB1,450bn in July.”

“On the positive side, new aggregate financing jumped to RMB1,522bn from RMB1,037bn in July, driven by a surge in new corporate bond financing and a smaller fall in shadow banking (trust loans and entrusted loans combined).”