China's Economic Rebound

China's Economic Rebound

over 3 years ago2 mins

Key data released on Tuesday showed that – for all the COVID-related challenges so far – China’s economy just keeps bouncing back 🇨🇳

What does this mean?

The data was a double whammy of good news. For one thing, industrial production – the heart of the Chinese economy – climbed 5.6% and beat economists’ expectations. For another, the country’s retail sales rose 0.5% in August, recording their first gain of the year. Put the two together and you’ve got some very happy investors – so happy, in fact, they sent China’s currency to a 16-month high.

Source: Bloomberg
Source: Bloomberg

It looks like nervous Chinese consumers have finally joined Americans and Europeans in flashing the cash – even if, like their neighbors in the West, their spending is skewed more toward physical goods than to services 🛍 They’re less likely to catch COVID from a new hairdryer than from a trip to the hairdressers, after all...

Daily Brief Image

Why should I care?

More consumer spending is exactly what the Chinese government needs: it’s been trying to steer the economy away from a reliance on exports and toward a healthier domestic market. In fact, China’s hoping to have at least 560 million “middle income” consumers by 2025, creating a market that’d be even bigger than America’s 💴 2025 feels like an awfully long way away, mind you – especially considering economists reckon China’s economic growth will be as little as 2% this year. That’d be its weakest since 1976…

Source: Bloomberg
Source: Bloomberg

It isn’t just China reporting a rebound from the depths of the corona-crisis: H&M – the world's second-biggest fashion retailer – reported better-than-expected quarterly revenue on Tuesday, as well as a profit of $229 million 👗 That pushed shares of the Swedish retail giant 11% higher, which bodes well for rival Inditex’s results on Wednesday. Then again, as some European countries think about ending employee support programs and the US struggles to agree on next steps, the days of confident consumers may be numbered.

Daily Brief Image
Finimize

BECOME A SMARTER INVESTOR

All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

Finimize
© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG