Chinese Economic Figures Show Promise

Alan Penny

16 December 2019

3 min read

China stock market

  • Industrial Production year-over-year better than anticipated
  • Retail Sales year-over-year stronger
  • Unemployment Rate remained steady

Early Monday morning in Beijing, the Chinese released several economic figures giving the markets a little bit of hope when it comes to mainland China and its economy. Recently, a lot of the numbers have been weaker than anticipated. Between these numbers and the “Phase 1 deal” being agreed to in principle, there could be a bit of bullish pressure coming out, not only from the deal but also through a handful of numbers.

The Chinese economic figures released

The economic releases that came out were all either better than anticipated or at least as expected. The Industrial Production year-over-year figures were 6.2%, as opposed to the 5.1% expected. This is very good news considering that the trade war has had a lot of concerns come up about the Chinese economy. Industrial Reduction gives us an idea as to what the Chinese economy may be doing as it is so heavily export-driven.

this could help China get away from being so heavily dependent on the rest of the world, which is part of what the attraction of investing in China is

Retail Sales year-over-year came out at 8.0%, which is much stronger than the 7.6% that the market was looking for. Because the Chinese economy is starting to shift into more of a consumption-based economy, this is exactly what longer-term people would expect. This could help China get away from being so heavily dependent on the rest of the world, which is part of what the attraction of investing in China is.

The Unemployment Rate of 5.1% was released, which is the same as the previous month. Because of this, it looks as if there are still plenty of Chinese employed. However, investors must keep in mind that employment rate calculations are difficult to ascertain in certain parts of the country. This is especially true in the more rural parts of China, which are decidedly very different than places like Shanghai, Beijing, or other major cities.

Reading between the lines

When looking at the announcements, it can be seen that the Chinese economy is doing fairly well. Unfortunately for traders, even though the Chinese numbers don’t necessarily add up quite often, they are the numbers that are available to work with.

Ultimately, this is a market that is opening up to the world slowly, and in a bit of an uneven pattern. Because of this, there will be the occasional pushback, but ultimately one of the biggest deals that traders have to deal with when looking at China is that the entire structure of the economy is changing.

If the “Phase 1 deal” is going to go forward, the one thing it will do is keep more tariffs from being levied against the Chinese, and that in and of itself will make a huge difference going forward. The Chinese have taken it on the chin as they export much more into the United States than the United States sends to China. Now that things are cooling off a bit, this should help China.

Written By
Alan Penny

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