On a quarterly basis, China’s official GDP grew by 1.8%. This was up from 1.2% in Q1, the slowest pace since quarterly growth figures were first published at the beginning of 2011. Accordingly, both our CMI and official GDP data suggest that China’s dramatic slowdown bottomed out in the first quarter of this year. This is in line with our view that China’s policymakers are in the process of ‘doubling down’ on investment in a bid to kick-start the economy.
The monthly statistics released alongside last week’s GDP data reaffirm that view, pointing to China’s pursuit of short-term growth objectives at the expense of rebalancing. Indeed, indicators most closely linked to China’s tried-and-tested growth model, electricity production and bank lending growth, picked up last month. In addition, growth in fixed-asset investment by private enterprises fell to a record low in the first half of the year compared to the same six months a year ago. Meanwhile, the equivalent figure for state-owned enterprises rose by 23.5%. [Link]