Next Week in China: 14-18 October 2024

Major Data Releases:

• 13 October: China to report September trade balance, exports and imports data
• 15 October: China to set one-year medium-term lending facility (MLF) rate
• 18 October: China’s National Bureau of Statistics to hold press conference on economic situation
• 18 October: China to release September industrial production report
• 18 October: China to release September report on energy production
• 18 October: China to report September investment in fixed assets (excluding rural households)
• 18 October: China to release September real estate investment data
• 18 October: China to report September retail sales data
• 18 October: China to report September households’ income and consumption statistics
• 18 October: China to report September industrial capacity utilization rate
• 18 October: China to report September housing price index
• 19 October: China to report preliminary data on the value added of major industries for the third quarter
• 20 October: China to report September foreign direct investment data

After returning from the week-long national holiday, next week marks a crucial period for China’s economy with over 10 key data points scheduled for release.

There were minor changes in September for the macroeconomy, with the persistent issue being insufficient domestic demand. Real estate sales continued to decline on a year-over-year basis while consumption and investment figures also remained low. Prices were weak, with the producer price index estimated to have further declined by an expected 2.6 per cent. Meanwhile, some changes are worth noting for external demand and consumption. China’s overall economic situation remains challenging with various sectors showing signs of continued weakness.

Exports likely grew at a softer pace of around 5 per cent in September from 8.7 per cent in August. JPMorgan’s Global Purchasing Managers’ Index dropped to 48.8 in September, down from 49.6 previously, to mark the third consecutive month of decline. This rate of decline matches the largest single-month drop since October 2023. The new orders sub-index also fell to 47.3 from 48.9, indicating that future demand will likely remain depressed. As of September 22, the four-week container throughput at monitored ports in China increased by 5.4 per cent year-on-year, decelerating from a 9.3 per cent increase in August.

On the consumption side, sales of automobiles and home appliances have shown some recovery in response to the government’s trade-in subsidy policies. Total retail sales in September are expected to rebound by around 2.9 per cent year-on-year. Furthermore, as the Chinese government rolls out its newest stimulus package, economic activity and prices are expected to rebound which will lead to higher residents’ income and employment. However, the behavioural pattern of “more savings, less debt, less consumption” among mainland China residents is difficult to reverse quickly. Thus, any significant pickup in consumption activity may have to wait until next year.

For equity, as of Thursday, October 10, the MSCI China Index had decreased by 6.76 per cent, the Shanghai Composite Index had fallen by 1.04 per cent, the Shenzhen Component Index had slipped by 0.56 per cent, while the ChiNext Index rose by 1.74 per cent from the previous week. In the short term, the upward trend in A-shares after the holiday week is likely to continue. Sustaining this increase over the medium term requires improved market expectations, while continuous policy coordination and synergy are needed to address long-term economic challenges in China.

This piece has been co-produced with Yiyi Capital Limited in Hong Kong, a China specialist and a part of a global financial services group.