China Growth Tracker: Is the Reopening About to Falter?

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 is sat a touch below record highs and is leading PMIs. We’ll be on the watch for a higher reading in March.
• Our market data-based China growth tracker has remained close to YTD lows (Chart 2). Our economic-based China growth tracker has sparked higher following stronger-than-expected PMIs.

China Reopening Index Leading the Composite PMI

Our high-frequency China reopening index has peeled back from record highs, having identified a hotter-than-expected PMI (Chart 1). However, it has exhibited volatility throughout its history and, therefore, could likely continue to drive higher even higher.

Our market data-based China growth tracker remained close to YTD lows, increasing just four points over the past two weeks (Table 1). Meanwhile, our economic-based China growth tracker is up 61 points over the past month as PMIs positively beat expectations (Table 2). And with the release of the Caixin contributions, all of China’s four main PMIs are back to at least ‘normal’ levels, with some readings at record highs.

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.

Photo Credit: depositphotos.com

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