China published its second-quarter GDP data on Monday with a big – but disappointing – number, 6.3% growth year on year. The reason for the disappointment comes from the hugely positive base effect, as last year’s second-quarter GDP growth was virtually because of the severe lockdowns happening in Shanghai and elsewhere in the country. The underwhelming growth in the second quarter is not all about the lack of external demand….
Link Securities| In his speech to the Summer Davos Forum, Chinese Premier Li Qiang said China is still on track to achieve its annual growth target of close to 5%, with 2Q2023 expected to grow faster than 1Q2023. The Chinese Premier acknowledged that China’s development still has imbalances and is inefficient, and that economic output per capita still remains low. He argued that companies, not governments, must decide how to…
Link Securities| China’s advance manufacturing activity index, the manufacturing PMI compiled by media group Caixin unexpectedly rose to 50.9 in May from 49.5 in April. The FactSet consensus of analysts had expected a lower reading of 49.4. An index reading above 50 points indicates expansion in activity from the previous month, while a reading below that level indicates contraction in activity. Production increased at its fastest pace in eleven months,…
Alicia García herrero (Natixis) | During the past fifteen months after the outbreak of the Ukraine war, China and Russia’s trade value increased by 36.5% compared to pre-war levels, showing their much-enhanced ties in merchandise trade. Meanwhile, in addition to the upswing of the headline amount, some new patterns in their trade structure are also worth watching. For example, Russia has moved up rapidly in the rank of China’s external…
Banca March: Activity accelerates in China, but at a slower pace than expected. The April set of activity indicators showed a rebound in growth, as industrial production accelerated to 5.6% while retail sales advanced 18.4%. Although these data are very positive and confirm that the reopening of the economy is boosting activity, they fell short of expectations (10.9% and 21% respectively). On the consumer spending side, the best performing components…
Alicia García Herrero (Natixis) | The strategic competition between the US and China started in early 2018 when the Trump administration implemented untargeted import tariffs and reoriented most of its trade efforts towards widening the technology gap between China and the US with a special focus on deep tech, such as semiconductors. The Biden administration has pushed even further in that direction. However, one should not forget that well before…
Link Securities | China’s Gross Domestic Product (GDP) expanded by 4.5% year-on-year in 1Q2023, beating FactSet’s analyst consensus reading of 3.4%, and following a 2.9% rise in the previous quarter. The reading represents its largest increase since 1Q2022, amid the government’s post-pandemic economic recovery momentum, although the growth is somewhat lower than the government’s forecast of 5% growth for the year as a whole. Meanwhile, China’s industrial production rose by…
Alicia García Herrero (Natixis) | Brazilian President Luiz Inácio Lula da Silva is currently in Beijing with a huge official and business delegation. His goals are clear: first and foremost, bringing growth opportunities to Brazil, whose economy has been battered by the Covid pandemic. Brazilian exports of commodities into China have ballooned since Beijing’s fiscal binge in 2008 that led to pent-up demand for commodities. More recently, Brazil’s large lithium reserves,…
Bankinter | CPI falls back in March to +0.7% year-on-year from +1.0% and Industrial Prices remain negative at -2.5% year-on-year. This is the lowest CPI reading since September 2021 and Industrial Prices (IPP) since June 2020. The CPI Underlying Rate stands at +0.7% year-on-year from +0.6% previously. Analysis: Consumer and producer price inflation remains at exceptionally low levels in China. CPI has remained below the government’s target of +3% for…
Alicia García Herrero (Natixis) | China’s so-called Two Sessions, the country’s most important annual political gathering, marked a transition this year. Held in early March, it included the final work report – or summary of government business – delivered by outgoing Prime Minister, Li Keqiang, who after two five-year terms as China’s prime minister, handed over to Li Qiang. Against this backdrop, Li Keqiang’s 2023 work report was blissfully short,…