Via a note from Kiwi Bank taking a look at New Zealand’s largest trading partner, China.
A good summary of where China’s post-reopening economy is at:
- China’s post-Covid recovery looks to be stalling. There was an initial burst in activity when restrictions were relaxed in December. But in recent months, several indicators suggest that economic growth is losing steam.
- Manufacturing activity shrank further in May, with the PMI sliding deeper into contractionary territory (below 50) – from 49.2 to 48.8, a five-month low.
- Activity in the services sector expanded, but at the slowest pace in four months.
- Retail sales, industrial output, and investment have also all undershot projections.
- Annual figures look deceptively strong given last year’s depressed numbers due to the Shanghai lockdown. But the monthly moves present a more accurate and far less rosy account.
- Trade data have also been rather lacklustre. Both import and export growth have not been as strong as expected. reflecting sluggish internal and external demand.
Kiwi Bank concludes with implications for the PBOC:
- Unlike other central banks, there’s pressure to keep policy loose and supportive.
PBOC Governor Yi Gang