China Growth Tracker: Economic Data Confirms Turn in Fortune

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

• Our new high frequency China reopening index continues to rally higher. It is yet to reach peak activity levels seen in 2021 but is fast approaching there. 
• China is experiencing a bumpy road to recovery. Our market data-based tracker collapsed 28 points, with the Baltic Dry Index leading the way lower (Chart 2). In contrast, our economic data-based tracker is benefitting from the better data seen through January (Chart 3). 

A Bumpy Road to Recovery 

The China reopening remains a hot topic. It was never going to be plain sailing. Two weeks ago, activity had only just recovered to the average 2022 levels. Now, the latest high-frequency data shows the reopening steaming ahead, approaching the highs seen last year.  

This sits in contrast to our market-based tracker, which has fallen 28 points over the past two weeks taking it to its lowest level since early November (Table 1). All five components contributed to weakness, with the Baltic Dry Index leading the pack.  

Meanwhile, our economic-based tracker continues to climb from cycle lows with January data proving a stark improvement from December (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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