• Consumption Trends – Retail sales growth appears to be picking up, but it is still notably lower than the pre-COVID growth levels of 2019. Aside from Covid-disturbance, weak employment growth continues to drag on household consumption.  

• Trade Trends – Export growth accelerated in June as the global economic re-opening lifted demand. A moderation in China’s export growth is still anticipated in late 2021, but it will likely be more gradual than previously expected. China’s export sector will continue to outperform while other competing export countries struggle to resume full and stable production due to COVID. China economy; China; Economic trend; economic growth.

Implications for Business

Exports continue to beat expectations, and there is a good chance this will continue due to ongoing production disruptions outside of China. Aside from this positive anomaly in exports, downward pressure on Chinese growth is mounting. Real estate investment has started to weaken, and employment growth remains sluggish.  As indicated by July’s surprise cut in Reserve Requirement Ratio (RRR), China’s policy makers appear concerned by emerging growth pressure. As recovery dynamics are likely to fade in 2022, members should be aware the path to normalization for China’s economy could be bumpy in the post-Covid era.