China: Mixed economic signals persist - NAB

According to Gerard Burg, Senior Economist at NAB, trends in China’s data remain quite mixed, with investment strengthening and retail spending weakening.

Key Quotes

“We are yet to see any clear impact from US tariffs imposed in recent months (aside from weakness in manufacturing surveys). Our forecasts for China’s economic growth remain unchanged, at 6.6% in 2018, 6.25% in 2019 and 6.0% in 2020.”

“China’s industrial production grew marginally more strongly in October – increasing by 5.9% yoy, compared with 5.8% in September (which was the weakest increase since the opening two months of 2016).”

“The growth in China’s fixed asset investment picked up in October – with real investment rising by 5.6% yoy in October (from 3.3% in September).”

“There remains no clear sign of negative impacts from US tariff measures, with China’s trade surplus expanding in October to US$34.0 billion (compared with US$31.3 billion previously).”

“In real terms, retail sales growth slowed further – down to 5.6% yoy (from 6.4% in September) – the slowest rate of growth since May 2003.”

“New credit issuance was comparatively weak in October – with lending only around 60% of the total recorded in same period last year.”

“Following a period of considerably volatility over the third quarter, the 7 day Shanghai Interbank Offered Rate (Shibor) was comparatively stable in October – fluctuating near the 2.6% mark. This represents an easing of around 20 to 25 basis points compared with the period between early 2017 and mid 2018.”