May 18, 2021

China’s Economy at a Glance – May 2021

Smaller base effects meant smaller growth rates in April but retail sales are still lagging.


  • China’s industrial production increased by 9.8% yoy in April 2021, down from 14.1% yoy in March. It is worth noting that China’s industrial recovery from COVID-19 disruptions was already well underway in April 2020, meaning base effects for this month were smaller than in March. There has been a marked easing in month-on-month growth since September 2020, suggesting that the industrial recovery had largely been completed around this point, with slower organic growth subsequently.
  • Growth in China’s fixed asset investment slowed further in April – increasing by 10.9% yoy (compared with 19.4% yoy in March). Producer prices have risen sharply in recent months – with these increases flowing through into the cost of investment. As a result, our estimate of real investment slowed significantly in April, down to 3.4% yoy (from 14.3% yoy in March). That said, when compared with the same period in 2019, real investment was around 8.2% larger in April versus 6.2% in March (highlighting the impact of base effects).
  • Nominal retail sales growth was well below market expectations and retail prices rose more rapidly in April, meaning that real retail sales increased by 15.8% yoy (down from 33.0% yoy in March). When compared with the level of sales in April 2019, real retail sales rose by 5.4% in April, compared with the 8.9% increase for March 2021 over March 2019 – highlighting the imbalance in China’s economy at present (which is overly reliant on the industrial sector).
  • China’s trade surplus was wider once again in April – up to US$42.9 billion, compared with the relatively small US$13.8 billion surplus recorded in March. A month-on-month surge in exports, combined with a slight easing in imports, drove the surplus higher. Trade tensions between the United States and China could re-emerge – China’s rolling twelve month trade surplus with the United States widened further in April, to a new record of US$354.2 billion.
  • In the first four months of 2021, China’s new credit issuance totalled RMB 12.1 trillion, a decrease of 15.0% yoy. Bank lending increased modestly over this period, while non-bank lending significantly contracted, down by almost 47% yoy. This decline has largely reflected weaker bond issuance, with corporate bonds down by 55% yoy and government bonds by 46% yoy.
  • The People’s Bank of China (PBoC) has maintained a stable policy rate over the past year, with the one year Loan Prime Rate remaining at 3.85% since April 2020. There is limited external pressure – with other major central banks expected to keep rates at current low levels, despite concerns around the upturn in inflation.

For further details, please see China’s economy at a glance – May 2021

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