China Growth Tracker: Economics Data Remains Pessimistic

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 high-frequency China reopening index appears to have found a solid base while our market data-based China growth tracker has further improved.
• In contrast, our economic data-based China growth tracker has worsened again following the latest trade data.

Economic Data Continues to Diverge from High-Frequency Outturns

While it is unclear if the recent pick-up in our high-frequency China reopening index is just another spike or not, we have found a solid base (Chart 1). The improvement has come in line with improved box office, port and travel data (Chart 2). Similarly, our market data-based China growth tracker has improved by another seven points with oil, the Baltic Dry Index, and China 10Y yields proving the drivers (Chart 3 and Table 3).

However, economic data continues to diverge (Chart 4). A lack of demand helped the latest (July) inflation print reveal deflation for the first time since 2020. On a similar note, China’s export prices are at their lowest since the GFC. Focusing on our economic data-based China growth tracker, but staying on trade data, slowing import volumes have further weighed on our index (Chart 4 and Table 2). The outlook there is pessimistic, in line with President Biden’s (sometimes incorrect) statements, who also introduced four new China investment restrictions.

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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