In case you missed it, China’s weak Q2 GDP data is here in this post, and it’s wrong for both the quarter/year and the year:
The reasons behind China’s relatively slow growth are not mysterious:
- Long-term downturn in the real estate market
- Real estate sector is burdened with debt
- Household consumption is weak.
Weak data will intensify calls for more stimulus measures.
Third session this week:
The Third Plenary Session is a key meeting of the Chinese Communist Party leadership. The session, which begins Monday, will try to strike a balance between boosting growth and cutting debt. China is targeting growth of “around” 5 percent this year.
Measures taken to stimulate domestic demand and counter the negative impact of the real estate crisis include:
- Boosting investment in infrastructure
- Transferring money to high-tech manufacturing
This showed some benefit in industrial output and the export sector, with exports up +8.6% y/y in June (in USD):
CPI misses expectations in June, edges closer to deflation again:
Wholesale/factory sales continued to contract in June.
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USD/CNH update. The US dollar made gains after the political violence in the US over the weekend, with some reversal now in place:
