Ho Woei Chen, CFA, Economist of UOB Group, discusses the latest data releases in the China economy.
China April data largely missed expectations.
“China April data largely missed expectations, raising concerns that the country’s economic recovery momentum has stalled.” The low comparison base from the Shanghai shutdown last year boosted. The year-on-year growth rates of industrial output and retail sales. Although they were slower than projected, notably for industrial production.”
“The labor market recovery is still uneven. And new entrants and fresh graduates continue to face hiring challenges. As evidenced by the surge in youth unemployment to a record high.”
“Market expectations of a Chinese rebound may need to be tempered because the slowdown in external demand is exerting a far greater downside.” China is under strain. Furthermore, the most recent statistics revealed that China is currently experiencing a property market slowdown, which has hampered investment and kept consumer sentiment low.”
“The PBOC kept the 1Y China medium-term lending facility (MLF) rate unchanged at 2.75% in May, the 9th month in a row.” The central bank maintained adequate liquidity with a net liquidity injection of CNY25 billion via MLF this month, increasing the total net injection via the MLF instrument to CNY604 billion in the first five months.”
“We maintain our call for another RRR cut this year, but we see fewer chances of interest rate cuts resumed.”
