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Fast Comment ChinaIndustrial sector doing fine, but data mixed

  1. Industrial production growth jumped
  2. Overall growth set to slow
Industrial production growth jumped
Growth in industrial production jumped more than expected from 6.0 percent y-o-y in March to 7.0 percent in April. April is the first month which we know for sure was not distorted by the New Year effect. The jump had already been signalled by strong export growth in April, and is to some extent explained by the scrapping of the measures to improve air quality over the winter. Meanwhile, growth in retail sales declined from 10.1 percent y-o-y in March to 9.4 percent, and growth in fixed investments also declined (see chart). So overall, the April data are a mixed bag with no convincing signals for the direction of growth going into Q2.
Overall growth set to slow
With the US and China apparently getting closer to reaching some sort of deal, an escalation of the trade war seems less likely. However, even if a full-blown trade war is avoided, there are reasons to expect a slowdown, in our view. As the authorities try to reign in financial risks and dampen shadow banking activities, credit growth is slowing, thereby hurting overall economic growth. Furthermore, measures to dampen the wobbly property market, especially in terms of prices, have not yet been rolled back, while fiscal policy is being tightened rather than loosened. Should growth slow more abruptly, the authorities stand ready to support the economy to ensure that the growth target is achieved, we believe.


Bjarke Roed-Frederiksen

Senior Economist

Latin America and China

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