China Economic Data Beats Across The Board In Apparent ZeroCOVID Policy ‘Victory Lap’


In what appears like a victory lap of data showing their ZeroCOVID policy worked, every data item in tonight’s China economic deluge beat expectations in May.

While China remains the most ‘locked down’ nation in the world, and Shanghai faces re-lockdowns, May did see Goldman’s ‘Effective Lockdown Index’ fall for the communist nation

While all the economic signals did deteriorate in May (except unemployment), they also all beat expectations…

Retail sales fall less than expected and there’s a tick higher in investment. Industrial output notably stronger, reflecting the easing of restrictions, and the surveyed jobless rate fell to 5.9%

  • China Industrial Production YTD YoY BEAT: +3.3% vs +3.1% exp but WORSE from +4.0% prior

  • China Retail Sales YTD YoY BEAT: -1.5% vs -1.7% exp but WORSE from -0.2% prior

  • China Fixed Asset Investment YTD YoY BEAT: +6.2% YoY vs +6.0% exp but WORSE from +6.8% prior

  • China Property Investment YTD YoY BEAT: -4.0% vs -4.4% exp but WORSE from -2.7% prior

  • Surveyed Jobless Rate BEAT: 5.9% vs 6.1% exp and BETTER than 6.1% prior

Simply put, today’s data provides prima facie evidence that the Chinese economy hit a bottom in April and is now slowly on the mend – Mission Accomplished Beijing?

Looking through the retail sales data, there were big drops for clothing, cosmetics, jewelry, electronics, furniture, automobiles and more. Beverages, tobacco, alcohol and petroleum (probably reflecting oil prices) were among the gainers.

However, not wanting to steal the jam from China’s donut too much, despite industrial output rebounding to growth territory, apparent oil demand – a leading indicator – widened its decline to 8.3%YoY in May, suggesting that more bad news is ahead in the coming months.

As Bloomberg notes, even the NBS is hinting at caution: “We must be aware that the international environment is to be even more complicated and grim, and the domestic economy is still facing difficulties and challenges for recovery.”



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