China Growth Tacker – China Growth Expectations Strong Despite US Sanctions

We recently published a note on how to track Chinese growth in real-time using financial and commodity market prices. In these weekly reports, we will update the indicator to help us track growth. The latest data shows:

• Our overall short-term growth tracker remains at elevated levels, and is up on last week (Chart 1). We like to focus on this measure as it tends to drive investor expectations.
• The positive market shift comes in the face of recent US sanctions, which suggests growth is yet to be impacted.
• Within the components, short-term positive changes in oil and Baltic Dry explain the upward shift in the overall headline number (Charts 4, 5).
• However, three-month changes in iron ore (Chart 2), copper (Chart 3) and bond yields (Chart 6) are down from their 12-months highs.
• Long-term changes in the components are largely positive (except copper), which is reflected in a 0.1pp increase in our growth tracker score.
• Overall, Chinese growth remains healthy, with no fundamental signs of a reversal. We must continue to wait and see if recent geopolitical developments will have real impacts on China.

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.

(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)