• China’s economic recovery remains driven by its industrial sector – where growth returned to its pre-COVID-19 trend in August. Much of this activity seems to be driven by housing and infrastructure construction – with a fresh record for crude steel output in August and strong investment in these sectors. Consumption trends remain subdued – with real retail sales still declining in year-on-year terms.
• China’s industrial production grew more rapidly in August – increasing by 5.6% yoy (compared with 4.8% yoy in July). There remained a considerable divergence between the two major manufacturing surveys in August, with the private sector Caixin Markit PMI much stronger than the official NBS measure.
• Real fixed asset investment rose by 9.4% yoy, up from 8.5% yoy previously. This was the strongest increase since August 2016. Surprisingly there was a slowdown in investment by state-owned enterprises (which had driven growth in recent months), with a strong increase in private investment.
• While nominal retail sales grew for the first time in 2020, real retail sales remained negative – falling by 1.1% yoy in August (compared with 2.8% yoy in July).
• China’s trade surplus narrowed slightly in August – remaining historically high at US$58.9 billion (down from US$62.3 billion in July). This reflected a marginal month-on-month decline in the value of exports and a slight increase in imports.
• China’s new credit issuance accelerated in August – totalling RMB 3.6 trillion (compared with RMB 1.7 trillion in July). When compared with the previous month’s level, the increase was largely driven by an increase in non-bank lending.
• China’s monetary policy has remained stable since the previous cut in the Loan Prime Rate in April. According to statements made by People’s Bank of China officials, the bank intends to maintain “normal” monetary policy as its economy recovers – suggesting that further easing is unlikely unless economic conditions deteriorate..

For further details, please see China’s Economy at a Glance September 2020.