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Economist at UOB Group Ho Woei Chen, CFA, assessed the latest set of economic indicators in the Chinese economy.

Key Quotes

“China’s macroeconomic indicators in July affirm the stabilisation in the economy even as the pace of recovery appears to be slowing. Industrial production and retail sales lagged expectations in July but fixed asset investment (FAI) and jobless rate were in line with consensus forecasts.”

“The July surveyed jobless rate was unchanged from June at 5.7%, as it came off a high of 6.2% in February. We continue to expect the broad-based recovery in China’s economy to stabilize overall labour market conditions in the second half though certain sectors that are exposed to tourism and retail could remain weak.”

“Notably, the recovery in retail sales has not kept up with expectation and pose the greatest drag to growth in the second half. Consumption had contributed 57.8% of 2019’s GDP growth. As such, the government will continue to concentrate efforts to boost consumption demand and stabilise the jobs market. Another risk pertains to the resurgence of COVID-19 in parts of the world which could also upend the expected recovery in global demand. For now, we maintain our forecast for China’s full-year GDP at 1.8% with 3Q20 growth at 4.9% y/y and around 5.7% in 4Q20 (2Q20: 3.2%).