Mike had the industrial production and retail sales data from China yesterday, both of which came in below expectations.

Credit Agricole reports on the data, saying:

  • Data from China was not that promising
  • The data “showed a uniform weakening of growth”
  • The “economy is sliding towards a new normal of 7% expansion”

BUT … there is a “silver lining”:

  • “short-term indicators of demand momentum have improved;
  • the housing market is showing signs of life
  • and the near-record trade surplus will continue adding to growth”
  • They estimate that GDP will expand by only 7.3% y/y for the current quarter

Says “the strong external sector” is suggestive of scope for yuan appreciation