How is China set to tackle headwind for its anniversary mark

Macro

Greater China Sales Traders

Monthly Macro Outlook: Prepared for Lower Growth

The latest data confirm the macroeconomic environment remains challenging for China. China’s credit impulse, which leads the real economy by 9 to 12 months, has improved since Q3 2018, but the inflow of new credit is not stimulating yet the economy on a broad-based level. Domestic demand is still weak, as pointed out by the latest import figures and by the contraction in auto.

Compared with previous quarters, data are slightly improving like newly released Caixin and official manufacturing PMI for September. But the domestic economy is still under severe stress. On the top of that, the export industry is suffering from external headwinds, notably the impact of trade war and lower global growth. The latest new exports orders data are slightly better, including for small and medium companies, but they are still deeply in contraction territory. Industrial production is also sharply decelerating, at 4.4% YoY in August, which will weight negatively on GDP performance in Q3 and Q4 this year.

Decelerating Industrial Production will weight negatively on GDP performance in Q3 and Q4

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