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March Muddle: China's Three Market Indicators Range-Bound
This cycle is different from previous rounds in the 2000s and 2010s, in that the downturn has driven by a collapse in household spending. As a result, the most important indicators are those that highlight consumer and market sentiment.
The three higher-frequency data series we watch are property sales, equity pricing - and especially bond spreads, a crucial gauge of where we are in the household "savings glut".
All three indicators were still range-bound in March, with some bouncy activity but no clear improvement, indicating a stable but weak economy. Which is exactly what our Activity Index has been showing in recent months, i.e., underlying real growth of around 2% y/y with a sideways trend. China has not yet achieved a sustained consumer spending recovery, and there's more work to be done.
March Muddle: China's Three Market Indicators Range-Bound (PDF)
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