May 2019 -  April Data Release

The Conference Board Leading Economic Indicator (LEI) for China suggests that growth momentum diminished in April, ahead of the escalated tariffs imposed on May 10 hitting the economy. As trade frictions between the US and China intensify, the growth slowdown in China is likely to accelerate.

April data was weaker than expected. This is concerning given that the negative impacts of the US-China trade war have yet to kick in fully – i.e. hits to the Chinese goods trade and the industrial sector that is connected to it. Amidst intensifying economic pressure, significant stimulus measures are becoming more likely. But the Q1 case demonstrates the policy challenge: strong Q1 credit expansion served to boost real estate and infrastructure construction, which in turn stoked demand in upstream sectors like steel and cement; but it had very little impact on downstream sectors like auto and electronics manufacturing.