Deutsche Bank-China in Pictures Slow but persistent weakness-109342525

DeutscheBankResearchMacroStrategy:PerryKojodjojoHazelLaiPerry.Kojodjojo@db.comHazel-a.lai@db.comEconomics:YiXiongDeyunOuYi.xiong@db.comDeyun.ou@db.comJuly2024IMPORTANTRESEARCHDISCLOSURESANDANALYSTCERTIFICATIONSLOCATEDINAPPENDIX1.MCI(P)041/10/2023.UNTIL19thMARCH2021INCOMPLETEDISCLOSUREINFORMATIONMAYHAVEBEENDISPLAYED,PLEASESEEAPPENDIX1FORFURTHERDETAILS.ChinainPicturesSlowbutpersistentweaknessDistributedon:22/07/202400:02:11GMT7T2se3r0Ot6kwoPaDeutscheBankResearch•China’seconomicgrowthdeceleratedinrecentmonths.Despiteareboundinexports,domesticdemandhassoftenedsomewhatinQ2.Asaresult,GDPgrowthslowedto4.7%inQ2from5.3%inQ1.Thedragmainlycamefromtheservicessector,ledbyanunderperformingpropertysector.Thesedevelopmentshaveledustoadjustdownour2024GDPforecastto4.9%.•Lookingatthekeyeconomicsectors:(1)Thepropertysectoroutlookisstillunfavorabledespiterecentpolicyeasing,owingtoalargeinventoryoffinishedandunfinishedhomes.(2)Householdconsumptionspendingcontinuedtorecoveratamoderatepace,butitwasconstrainedbyslowerincomegrowthandstill-weaksentiment.(3)ExportswilllikelyremainabrightspotoftheeconomyinH2,buthowtraderelationsunfoldbeyondthatwillbeakeyfocalpoint.•Inflationhasgraduallyimprovedtopositiveterritory,butlowerhousingandcarpricesarepreventingastrongerinflationrecovery.Weexpectconsumerinflationwillkeeponimprovingtoslightlyb...