Pol­icy Stim­u­lus Bears Fruit

ChinAfrica - - THE ECONOMETER -

in the sec­ond quar­ter of 2018, the Chi­nese econ­omy grew at 6.7 per­cent which is in line with ex­pec­ta­tions and marginally slower than the 6.8-per­cent growth recorded in the pre­vi­ous three quar­ters. Growth dur­ing the first half this year also stands at 6.7 per­cent. Amidst the on­go­ing trade war with the United States, as of July 27, the ren­minbi (RMB) has fallen 8.2 per­cent against the dol­lar since April 2. Hav­ing fallen be­low 3,000 in June for the first time in two years, Shang­hai Stock Ex­change Com­pos­ite In­dex made mi­nor gains in July af­ter the govern­ment in­jected some fresh cash to boost the econ­omy. How­ever, it was still at 2,869 on July 30. The Chi­nese Govern­ment bond also rose in July due to the pol­icy stim­u­lus with the 10-year yield go­ing above the 3.5-per­cent mark again. For­eign di­rect in­vest­ment into China rose by 1.1 per­cent year on year dur­ing the first half of 2018.

H1 2018 Trade Strong De­spite U.S. Pres­sures

While the U.s.-china trade ten­sions are a sig­nif­i­cant con­cern go­ing for the sec­ond half this year, an­a­lysts re­port that China’s trade con­tin­ued to see growth in trade dur­ing the first half. Over­all trade for the first half of 2018 stood at 14.12 tril­lion yuan ($2.09 tril­lion), a year-on-year in­crease of 7.9 per­cent. In the same pe­riod, ex­ports rose 4.9 per­cent year on year while im­ports grew 11.5 per­cent, rep­re­sent­ing a de­crease in the bal­ance of trade of 26.7 per­cent. The growth in do­mes­tic de­mand of 7.5 per­cent over this pe­riod is a core driver of the rapid growth in im­ports, lead­ing to the de­cline in net ex­ports.

Key Eco­nomic In­di­ca­tors Sta­ble

Growth in China’s con­sumer in­fla­tion slightly out­paced ex­pec­ta­tions in July, com­ing in 2.1 per­cent higher than July of last year. Mean­while, China’s pro­ducer price in­dex inched slightly lower than June, com­ing in at 4.6 per­cent. The of­fi­cial man­u­fac­tur­ing pur­chas­ing man­agers’ in­dex came in at 51.2, down from 51.5 in June, but still well into the ex­pan­sion­ary range. Be­sides Fe­bru­ary, (which is reg­u­larly low due to the Chi­nese New Year hol­i­day), this is the low­est level in over a year, since May of 2017. China’s Na­tional Bureau of Sta­tis­tics said in a state­ment that un­sea­son­ably high tem­per­a­tures and rain, cou­pled with trade ten­sions, were to blame for the down­turn in man­u­fac­tur­ing growth. Trade ten­sions con­tinue to cause some con­cern, as they were also the rea­son cited for the slow­down in GDP growth in the sec­ond quar­ter.

The Chi­nafrica Econome­ter is pro­duced by the bei­jing axis, an in­ter­na­tional ad­vi­sory and pro­cure­ment firm op­er­at­ing in four prin­ci­pal ar­eas: Pro­cure­ment, Sales Ac­ti­va­tion, Cap­i­tal, and Strat­egy. for more in­for­ma­tion, please con­tact: Kobus van der Wath, kobus@ax­is­group-in­ter­na­tional.com, www.the­bei­jin­gaxis.com

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