China Economic Data Disappoints: ETFs In Focus

China’s GDP has been growing at a strong pace. It increased 6.9% year over year in the second quarter of 2017, same as the first quarter. China reported a strong first half of 2017 but data released for July showed signs of fading GDP (read: China Q2 GDP Beats Expectations: ETFs in Focus).

The slowdown was widely expected. This can primarily be attributed to fears of a potential financial crisis owing to the looming debt problem faced by the country. The debt scenario in the world’s second largest nation prompted the government to adopt a tightening monetary-policy stance in order to rein in debt (read: China’s Inflation, Debt & Impact on Australia: ETFs in Focus).

Industrial production in the world’s second largest economy grew 6.4% year over year in July compared with 7.6% in June and below economists’ expectations of 7.1%.

Retail sales on the other hand grew 10.4% year over year in July compared with 11% in June and below economists’ expectations of 10.8%.

Investment on infrastructure and property increased 8.3% year over year in the January-July period, missing forecasts of an 8.6% growth.

Although China’s debt problem demands policy tightening, the cooling down of these major indicators might restrict the government from tightening monetary policy too aggressively in order to stabilize GDP growth.

China’s inflation in July came below expectations on a year-over-year basis. The inflation data represented by the Consumer Price Index (CPI) and Producer Price Index (PPI) was released on August 9, 2017.

National Bureau of Statistics reported that the country’s Consumer Price Index increased 1.4% year over year in July 2017, a lot below the central bank’s 3% target for the year. Producer Price Index increased 5.5% year over year as a result of soaring commodity prices and resilient demand. These figures missed Bloomberg’s forecast, as analysts had predicted a 1.5% rise in CPI and a 5.6% rise in PPI.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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