China/US trade

Chart of the Week : China’s GDP data

Macro FX

Christopher Dembik

Head of Macro Analysis

Summary:  Our 'Macro Chartmania' series collects Macrobond data and focuses on a single chart chosen for its relevance.


Click here to download this week's full edition of Macro Chartmania.

Just when we gave up on the idea of a V-shaped recovery, China posted GDP growth close to pre-Covid levels, thus confirming it may be the only major economy to experience a swift recovery. In Q3, China’s economy expanded 4.9%, missing expectations (consensus was out at 5.5%), but it is still regaining most ground lost in the first half of the year due to the outbreak. The other statistics released this morning attest the improvement in the economy. Fixed-asset investment rose 0.8% YoY in the first nine months of the year and industrial output and retail sales beat consensus, reaching 6.9% YoY and 3.3% YoY in September, respectively. One of our favorite coincident indicators to track the real-time evolution of the Chinese economy during the pandemic also validates the V-shape scenario. Air passenger traffic, which has been hit the hardest by the virus, is almost back to be pre-Covid time with domestic passengers numbers representing roughly 98% of 2019’s levels, at 47.75 mln in September. While the virus has first originated in China, the country was also the first one to implement very strict lockdown measures that have successfully managed to contain the pandemic, thus enabling a lasting reopening of the economy. Better virus containment in China is likely to accelerate China’s economic catch-up with the United States, as it has previously happened with the 2008 crisis. However, we are skeptical that China’s sound economic activity will be enough to carry the world. Contrary to the immediate post-GFC crisis, China has refrained from opening too much the credit tap. We use broad money supply growth as a proxy to assess China’s willingness to save the rest of world. While the increase in money supply growth reached almost 30% in 2010, it has barely moved upward during the pandemic, standing at around 10%. In our view, it proves this time China won’t do whatever it takes to save the global economy and will not continue to inflate asset bubbles at home. For investors, the performance of the Chinese economy represents an opportunity for portfolio diversification. As China is likely to continue to experience robust recovery in contrast to the rest of the world, Chinese equities will probably continue to be among the best performing markets this year.

Disclaimer

The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-sg/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.

Saxo Markets
Most of our staff in Singapore are working from home to help limit the spread of the coronavirus. We remain at your service on the details below. Thank you for your understanding.

Contact Saxo

Select region

Singapore
Singapore

Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-sg/about-us/awards.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.