China growth outlook.
The statement accompanying the second-quarter national accounts that the National Bureau of Statistics released on July 14 describe a “complex and grave” situation amid rising “uncertainties". However, although the second quarter growth was the weakest since 1992 and export-orientated activity was weak, domestic spending is improving. Retail sales rose to a 15-month high of 9.9% year-on-year in June, fixed investment gained 5.8% in January-June, up from 5.6% in January-May and the services purchasing managers index continues to expand solidly, close to its historic average.
- The US conflict could help productivity by raising the urgency of the policy drive to support tech, innovation and higher quality growth.
- The ultimate impact of tariffs depends on substitution choices and the sectoral and regional composition of future tariffs or concessions.
- A property market collapse is unlikely but faster demographic ageing and slower growth and urbanisation will hit demand in the longer term.