Economy

China's old data, new hope

16 November 2022 • 2 mins read
China: Old data, new hope

Source: AFP

  • October’s key data releases were all worse than expected, reflecting the adverse impact on the economy from China’s zero-Covid stance and the property market’s weakness.
  • Purchasing manager indices (PMIs), inflation, exports, credit growth, retail sales, investment and industrial production all showed China’s growth remained subdued last month.
  • The data thus underscores the importance of China’s three key shifts this month, easing zero-Covid policies, supporting the property sector and lowering tensions with the US.
  • The moves support our forecast for GDP growth to rebound from just 3.0% this year to 4.5% next year, and strongly benefit China’s risk assets.

October’s data were all worse than expected, reflecting the adverse impact from China’s zero-Covid policies on activity, subdued demand in the economy and property market weakness.

Caixin PMI, China

Source: Bank of Singapore, Bloomberg.

The first chart of October’s purchasing manager indices (PMIs) from Caixin show manufacturing and services firms both see activity contracting. The second chart shows October’s consumer price index (CPI) inflation rate remains tame at 2.1% while producer prices (PPI) are 1.3% lower than a year ago. And the last chart shows how lockdowns have hit consumption with October’s retail sales down 0.5% over the last 12 months while fixed asset investment and industrial production only expanded by 5.8% and 5.0%.

Inflation, China

Source: Bank of Singapore, Bloomberg.

October’s investment data also highlighted the property market’s weakness with investment in the sector 8.8% lower than a year ago. Subdued demand was shown too by October’s lacklustre credit growth of 10.3% while export growth turned negative for the first time in two years.

Economic Activity, China

Source: Bank of Singapore, Bloomberg.

The weak data thus underscores how important China’s key shifts this month are for the outlook. By easing zero-Covid controls, increasing aid for delivering housing projects and for property developers’ financing, and by lowering tensions with the US after Presidents Biden’s and Xi’s Bali summit, China’s GDP growth is likely to pick up from just 3.0% this year to 4.5% next year, marking an important turning point for China’s risk assets.

Important information
This product may only be offered: (i) in Hong Kong, to qualified Private Banking Customers and Professional Investors (as defined under the Securities and Futures Ordinance); and (ii) in Singapore, to Accredited Investors (as defined under the Securities and Futures Act) and (iii) in the Dubai International Financial Center to Professional Clients (as defined under the Dubai Financial Services Authority rules) only. No other person should act on the contents of this document.This product may involve derivatives. Do NOT invest in it unless you fully understand and are willing to assume the risks associated with it. If you have any doubt, you should seek independent professional financial, tax and/or legal advice as you deem necessary.

Please carefully read and make sure that you understand all Risk Disclosures, Selling Restrictions, and Disclaimers. This document must be read together with the relevant Prospectus & Offering Documents &/or Key Fact Statement.

Disclaimer
This document is prepared by Bank of Singapore Limited (Co Reg. No.: 197700866R) (the “Bank”), is for information purposes only, and is not, by itself, intended for anyone other than the recipient. It may contain information proprietary to the Bank which may not be reproduced or redistributed in whole or in part without the Bank’s prior consent. It is not an offer or a solicitation to deal in any of the investment products referred to herein or to enter into any legal relations, nor an advice or by itself a recommendation with respect to such investment products. It does not have regard to the specific investment objectives, investment experience, financial situation and the particular needs of any recipient or customer. Customers should exercise caution in relation to any potential investment. Customers should independently evaluate each investment product and consider the suitability of such investment product, taking into account customer’s own specific investment objectives, investment experience, financial situation and/or particular needs. Customers will need to decide on their own as to whether or not the contents of this document are suitable for them. If a customer is in doubt about the contents of this document and/or the suitability of any investment products mentioned in this document for the customer, the customer should obtain independent financial, legal and/or tax advice from its professional advisers as necessary, before proceeding to make any investments.

The Bank, its Affiliates and their respective employees are not in the business of providing, and do not provide, tax, accounting or legal advice to any clients. The material contained herein is prepared for informational purposes and is not intended or written to be used, and cannot be used or relied upon for tax, accounting or legal advice. Any such client is responsible for consulting his/her own independent advisor as to the tax, accounting and legal consequences associated with his/her investments/transactions based on the client’s particular circumstances.

This document and other related documents have not been reviewed by, registered or lodged as a prospectus, information memorandum or profile statement with the Monetary Authority of Singapore nor any regulator in Hong Kong or elsewhere.

This document may not be published, circulated, reproduced or distributed in whole or in part to any other person without the Bank’s prior written consent. This document is not intended for distribution to, publication or use by any person in any jurisdiction outside Singapore, Hong Kong, or such other jurisdiction as the Bank may determine in its absolute discretion, where such distribution, publication or use would be contrary to applicable law or would subject the Bank and its related corporations, connected persons, associated persons and/or affiliates (collectively, “Affiliates”) to any registration, licensing or other requirements within such jurisdiction.

Author:
Mansoor Mohi-uddin
Chief Economist
Was this page useful?