China plenum meeting against the background of calls for more economic stimulus

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:

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