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14 May 2015
China: Weak activity and spending coming into Q2 - Capital Economics
FXStreet (Bali) - Mark Williams and Chang Liu, Economists at Capital Economics, summarize the latest Chinese data, noting that weaker-than-expected data for April suggests that both activity and spending remained weak coming into Q2.
Key Quotes
"Weaker-than-expected data for April suggest that both activity and spending remained weak coming into Q2. Admittedly. industrial production growth recovered slightly from 5.6% y/y in March to 5.9% last month."
"But the pick-up in growth mainly reflects the fading of distortions caused by the unusually late timing of Chinese New Year, rather than any underlying improvement."
"The investment data were downbeat. According to our calculations, fixed asset investment growth slowed to 9.4% y/y in April from 13.5% in Q1. Retail sales growth also slowed."
"Meanwhile, China’s banks extended RMB707.9bn in net new renminbi loans last month, down from RMB1180.0bn in March Overall, though, the current weakness still appears mostly concentrated in industry and real estate."
"With China’s economy less reliant on these sectors than it once was and policymakers stepping up measures to shore up growth, we think a sharp slowdown over coming quarters can be avoided."
Key Quotes
"Weaker-than-expected data for April suggest that both activity and spending remained weak coming into Q2. Admittedly. industrial production growth recovered slightly from 5.6% y/y in March to 5.9% last month."
"But the pick-up in growth mainly reflects the fading of distortions caused by the unusually late timing of Chinese New Year, rather than any underlying improvement."
"The investment data were downbeat. According to our calculations, fixed asset investment growth slowed to 9.4% y/y in April from 13.5% in Q1. Retail sales growth also slowed."
"Meanwhile, China’s banks extended RMB707.9bn in net new renminbi loans last month, down from RMB1180.0bn in March Overall, though, the current weakness still appears mostly concentrated in industry and real estate."
"With China’s economy less reliant on these sectors than it once was and policymakers stepping up measures to shore up growth, we think a sharp slowdown over coming quarters can be avoided."