China: Growth risks rise with softer demand – Standard Chartered
Standard Chartered economists Hunter Chan and Shuang Ding assess China’s July-August data and conclude that domestic demand weakened while production held up.
Standard Chartered economists have identified potential growth risks for China due to softer domestic demand, despite steady production. In July and August, household consumption weakened, while manufacturing and real estate investment contracted. However, industrial production remained robust, driven by external demand and the ongoing AI supercycle.
The August data indicates that domestic demand further weakened, with production activity accelerating. The bank estimates that monthly GDP growth picked up in August, but remained below the 4.5%-5.0% annual growth target range. The forecast for Q3 GDP growth is now seen at 4.6% year-on-year, with significant downside risk. The government is expected to accelerate budget implementation and deploy bond proceeds to support infrastructure investment, while the central bank will likely maintain supportive monetary policy to ensure ample liquidity.
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