ICYMI, China’s poor Q2 GDP data is here in this post, a miss for both q/q and y/y:
The reasons behind relatively slow growth in China are not mysterious:
- protracted
property downturn - the property sector is debt-ridden
- household consumption is weak
The poor data will intensify calls for further stimulus measures.
The third plenum is this week:
The third plenum is an important meeting of Chinese Communist Party leadership meeting. It starts today, Monday, and will try to balance boosting growth and cutting debt. China is aiming for growth of ‘around’ 5% this. year.
Measures taken to stimulate domestic demand and counter the negative impact of the property crisis include:
- boosted infrastructure investment
- diverting funds into
high-tech manufacturing
This has shown some benefit in industrial output and the export sector, with exports +8.6% y/y in June (USD terms):
The CPI missed expectations and June and is flirting with deflation again:
Wholesale/factory deflation persisted in June.
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USD/CNH update. The USD gained after the weekend political violence in the US, with some unwinding of that move now: