Citi China Economics: Cyclical Bottom This Year? August Data Preview
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Citi expects China's August economic activity to remain weak but sees indicators stabilizing at low levels, potentially marking the year's cyclical bottom; the pivotal question is whether September delivers a policy-driven catch-up recovery. Exports are forecast to rise 27.5% YoY and imports to rebound to 32.0%, with a trade surplus near US$119.1bn, supported by AI-related semiconductor demand and higher oil prices. August CPI is seen at 0.8% and PPI at 3.7% as Middle East tensions revive energy inflation — gasoline retail prices +7.4% MoM in CPI and Brent averages +8.9% MoM in PPI. Food and gold add to CPI (pork +2.1%, vegetables +6.6% MoM; gold +31.1% YoY). Retail sales may edge up to 1.0% (July: 0.6%) as subsidized sales accelerate, while crude steel output fell 3.7% YoY in the first 20 days of August (July: -0.4%). Credit should be fiscal-led: new RMB loans of RMB500bn and total social financing of RMB2.2tn (including ~RMB1tn government bonds), with M1 recovering to 4.1% and M2 steady at 7.7%. The NDRC's rare August 28 national investment meeting and RMB800bn policy financing tools anchor September recovery hopes. This macro preview carries no ratings.