China: Growth momentum supports CNY backdrop – MUFG
MUFG’s Michael Wan notes China’s Q3 GDP growth firmed to 4.5% year-on-year, slightly above consensus, with September industrial production accelerating and fixed asset investment contractions narrowing.
China's economy showed signs of growth momentum in Q3, with GDP growth increasing to 4.5% year-on-year, slightly above expectations. Industrial production accelerated in September, while fixed asset investment contraction narrowed. However, stronger production has yet to lead to a recovery in household demand or property investment, which remains uneven.
This unevenness is crucial in assessing the sustainability of the supportive backdrop for the Chinese Yuan. Although the acceleration in production brought the annual growth target within reach, domestic demand and property investment concerns remain. While stronger production provides a more supportive domestic backdrop for the CNY, the composition of growth is essential in determining if this improvement can be sustained.
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