Economic Activity in China

Recommendation: OVERWEIGHT

China’s economic activity in August 2024 was weaker than expected, with retail sales, industrial production, and fixed asset investment (FAI) missing expectations:

• Fixed Asset Investment (FAI): FAI growth was 3.4% year-on-year for the first eight months of 2024, marginally below the forecast of 3.5%. August showed a slight improvement with a 2.0% increase year-on-year. High-tech manufacturing and water conservancy management (+32.6% year-on-year) drove the gains. Air transportation (+20.3%) and railway transportation (+16.1%) also contributed positively, while the real estate sector remained a significant drag with a 10.2% year-on-year decline.
• Industrial Production: Industrial production grew by 4.5% year-on-year in August, lower than the expected 4.7%. Manufacturing growth slowed, with declines in metal-related industries like metal smelting (-2.1% year-on-year) contrasting with growth in high-tech industries (+8.6%).
• Retail Sales: Retail sales growth slowed to 2.1% year-on-year, below the expected 2.5%. While online retail sales increased by 8.1%, auto sales fell sharply by 7.3%, dragging overall retail performance. Sales of white goods and audio-visual equipment saw improvements thanks to a government-backed “old-for-new” consumer goods policy.

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