China Growth Tracker: Domestic Demand Stalls as International Flights Pick Up

We published a note on how to track Chinese growth in real time using financial and commodity market prices. In these weekly reports, we update the indicators to help us track growth.

Summary

• Excluding flights from our high-frequency China reopening index, activity has fallen through April.
• In line with this, our market data-based China growth tracker has failed to improve, despite a strongly positive update to our economic data-based China growth tracker through March (Charts 2 and 3).

Is Domestic Activity Suffering from International Travel?

Continuing to focus on our high-frequency China reopening index excluding flights produces a pessimistic take on the latest developments of China’s reopening. The Chinese are spending less time at the cinema, ports are less busy, while domestic travel is failing to make much progress.

However, including flights shows that the Chinese are not just flying more, but they have begun to increasingly fly abroad, with Thailand benefitting. Bert believes the return of mainland China tourists can help his latest trade: short SGD/THB at 25.54, targeting 24.75.

Market-based measures of China’s growth are worsening, in line with weaker domestic activity (excluding flights; Table 1). Positive iron ore contributions were outdone by larger negative copper, oil, Baltic Dry Index and China 10Y yield contributions.

Meanwhile, our economic data-based China growth tracker remained positive through March (Table 2).

Bilal Hafeez is the CEO and Editor of Macro Hive. He spent over twenty years doing research at big banks – JPMorgan, Deutsche Bank, and Nomura, where he had various “Global Head” roles and did FX, rates and cross-markets research.

Ben Ford is Researcher at Macro Hive. Ben studied BSc Financial Mathematics at Cardiff University and MSc Finance at Cass Business School, his dissertations were on the tails of GARCH volatility models, and foreign exchange investment strategies during crises, respectively.

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