Goldman Sachs China Economic Activity and Policy Tracker: June 18
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Goldman Sachs reports that the Chinese economy maintained its recovery trajectory in June, though growth momentum has moderated. The latest data reveals robust industrial production and resilient export performance, contrasted by ongoing weakness in domestic consumption and declining property investment. The firm maintains its projection for second-quarter GDP growth at approximately 5.5%, with full-year growth expected to reach 5.0%.
Industrial production accelerated in May, expanding 6.7% year-over-year, up from 6.5% recorded in April. Export resilience persisted with an 8.6% year-over-year growth rate, largely supported by stable global demand. However, the consumption recovery remains notably uneven, as retail sales grew by merely 3.2% year-over-year in May, falling short of market expectations.
Real estate investment continues to act as a substantial drag, declining 9.4% year-over-year for the first five months combined. To mitigate these economic pressures, the government continues to deploy accommodative monetary and fiscal policies. The People's Bank of China held the Loan Prime Rate steady but injected liquidity through reserve requirement ratio cuts and relending facilities. Fiscally, local government special bond issuance accelerated significantly, reaching 1.2 trillion yuan in May alone.
Inflationary pressures remain subdued, with the Consumer Price Index rising a modest 0.3% year-over-year in May, while the Producer Price Index declined by 1.4%. The urban surveyed unemployment rate remained stable at 5.0%.
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