icapital.biz - English Vol 28 No 01

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The week of 18 August– 24 August 2016 Volume 28 Number 01
A | Market Opinion
Source: China: Fixed asset investment in Jan-Jul 016 (y-o-y,%).
China
Industrial production
In Jul, industrial
production rose 6.0%,
year-on-year, returning to
the growth rates recorded in
Apr and May – see figure
16. While output in the
mining sector fell by 3.1%,
manufacturing and utility
sectors’ output continued
to expand steadily. Output
growth of the high-tech
industries also remained
faster than that of the
traditional industries.
In Jan-Jul, industrial
production rose 6.0% from
Table 23 Vehicle Sales
Jul
2016
mln units
Jan-Jul 2016
Jul
2016
year-on-year % change
Jan-Jul 2016
Total 1.85 14.68 23.03 9.84
Passenger 1.60 12.65 26.26 11.13
Commercial 0.24 2.04 5.52 2.41
Source:
Figure 20 Renminbi Bank Loans
Figure 21 Money Supply and Bank Lending
Figure 22 Month-on-month Change in House Prices
the same period a year ago.
Retail sales
Despite growing at a
slower pace, consumer
spending remained resilient.
In Jul, retail sales rose
10.2% from a year ago. After
factoring out the price factor,
real retail sales rose 9.8%,
year-on-year – see figure
17. In Jan-Jul, retail sales
rose 10.3% from the same
period a year ago.
Fixed asset investment
Fixed asset investment
(excluding rural households)
in Jan-Jul 2016 rose 8.1%
from the same period a year
ago, 0.9 percentage
points slower than
the increase in
Jan-Jun 2016 – see
figure 18. This was
mainly due to a sharp
contraction in mining
sector investment and
slowing manufacturing sector
investment. Investment
growth was mainly
supported by higher public
infrastructure investment.
Auto sales
Total vehicle sales in
Jul dropped 10.59, month-
on-month, but surged
23.03%, year-on-year,
to 1.85 mln units – see
table 23. In the first 7 months
of 2016, auto sales rose by a
steady 9.84% from the same
period last year. Consumer
spending, although slightly
weakened, has remained
resilient – see figure 19.
Bank lending
Renminbi bank loans
outstanding at the end of
Jul were RMB101.95 trillion,
up 12.9% from a year ago.
New bank loans totalling
RMB463.6 bln were created
in Jul, the smallest amount
in 2 years – see figure 20.
However, the weakness is
likely to be temporary as
China’s economic growth
remains stable.
Money supply
The annual growth rate
of money supply, M2, at
the end of Jul moderated
to 10.2%, in line with the
slowdown in bank lending
growth – see figure 21 .
House prices
The number of cities
reporting month-on-month
decreases in house prices
rose from 10 in Jun to 16
in Jul, while the number of
cities reporting increases
in house prices fell from
55 to 51 – see figure 22.
Nevertheless, firm demand
is still exerting upward
pressure on house prices.
Monetary policy would need
to remain cautious.
Source: Capital Dynamics
Robust demand from local and foreign tourists has been a major contributor to
steady retail sales in China.
Figure 17 Retail Sales
Figure 16 Industrial Production
Figure 19 Vehicle Sales
Figure 18 Cumulative Fixed Asset Investment (Excluding rural households)
Despite growing at a slower
pace , consumer spending
remained resilient.
8 Capital Dynamics Sdn Bhd