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How is China’s economy doing? Don’t look to the GDP numbers

14 0 4

“Crosscurrents” seems to be the buzzword for global markets in 2019. And one of the oft-mentioned risks for 2019 is the ongoing slowdown in China.

Crosscurrents is also an apt descriptor for what is happening within the Chinese economy. On the one hand, the government aims to support the economy. On the other hand, the importance of controlling systemic risks limits the use of old tools.

A variety of economic indicators has provided conflicting signals, fiscal and monetary policies may appear to be moving contrary to investor expectations, and there are many unanswered questions about external factors affecting China’s economy and markets – most notably the ongoing trade war with the United States. These crosscurrents make it difficult to predict how Chinese assets will perform this year.

Recent data showed that China’s real GDP growth slowed to 6.4 per cent in the fourth quarter of 2018. Underneath the surface, different segments of the economy have been moving in different directions. Industrial production data showed a slight uptick after the government eased controls on polluting sectors and upstream producers last year, while consumer spending on durables, namely autos, continued to weaken. Infrastructure spending, a traditionally reliable channel through which to boost growth, also looked to have made a comeback towards the........

© South China Morning Post