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

ICYMI, China’s poor Q2 GDP data is here in this post, a miss for both q/q and y/y:

• China June Industrial output +5.3% y/y (expected +5.0%) Retail sales +2.0% (3.3%% exp)

The reasons behind relatively slow growth in China are not mysterious:

• protracted
  property downturn
• the property sector is debt-ridden
• household consumption is weak

The poor data will intensify calls for further stimulus measures.

The third plenum is this week:

• China’s plenum meeting in July will focus on the economy

The third plenum is an important meeting of Chinese Communist Party leadership meeting. It starts today, Monday, and will try to balance boosting growth and cutting debt. China is aiming for growth of ‘around’ 5% this. year.

Measures taken to stimulate domestic demand and counter the negative impact of the property crisis include:

• boosted infrastructure investment
• diverting funds into
  high-tech manufacturing

This has shown some benefit in industrial output and the export sector, with exports +8.6% y/y in June (USD terms):

• China trade data dribbling out: YTD USD denominated exports +3.6% y/y, imports +2%

The CPI missed expectations and June and is flirting with deflation again:

• China June 2024 CPI +0.2% y/y (expected +0.4%) and PPI -0.8% y/y (expected -0.8%)

Wholesale/factory deflation persisted in June.

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USD/CNH update. The USD gained after the weekend political violence in the US, with some unwinding of that move now:

This article was written by Eamonn Sheridan at www.forexlive.com.