August’s activity data shows China is continuing to lead the global economic recover.
Economic activity, China
Source: Bank of Singapore, Bloomberg
Industrial production rose 1.02%MoM and 5.6% YoY compared to 4.8%YoY in July. Retail sales expanded by 1.25%MoM and 0.5%YoY and fixed investment also improved by 4.18%MoM though it remains in negative territory at -0.3%YoY.
Exports beat expectations in August increasing by 9.5%YoY showing recovering demand in the rest of the world for China’s goods and services and total social financing - a measure of broad credit growth – picked up to 13.3%YoY.
The firmer data shows China’s rebound is broadening. Initially, it was driven by state-led activity in industrial production, infrastructure
and property investment after the pandemic subsided in Q2’20. But now consumers are spending again, and exports are rising in Q3’20.
Exports and imports, China
Source: Bank of Singapore, Bloomberg
China thus is set to be the only major economy to expand GDP this year, likely around 1.7%YoY.
Monetary and credit growth, China
Source: Bank of Singapore, Bloomberg
The CNY is benefiting from the rebound and is nearing our long target of 6.75 against the USD.
Bond yields, US and China
Source: Bank of Singapore, BloombergDisclaimer applicable to recommendation
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