China Economic Comment "Preview of May data: Growth Recovery, Inflation ..."

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China Economic Comment "Preview of May data: Growth Recovery, Inflation ..."

Global Research

4 June 2026ab

China Economic Comment Economics

ChinaPreview of May data: Growth Recovery, Inflation

Peaking Yu Song

Economist

yu-za.song@ubs.com

+86-10-5832 8508

We expect some recovery in activity data Grace Wang

April activity data were weak across many areas. We believe the weakness was driven by Economist

weaker fundamentals and data reporting issues. Some of the strength in the March data S1460524050003

grace-zc.wang@ubs.comwere likely at the expense of April data with the aim of achieving a strong 1Q growth.

+86-105-832 8335

Administrative policy stance also turned more cautious with greater emphasis on not

over-investing, over-borrowing or over-reporting. We expect some normalization in May, William Deng

though not necessarily across the board. A more meaningful rebound is more likely to Economist

william-w.deng@ubs.comhappen in June to ensure 2Q is not too weak. However, for the official policy tone to

+852-2971 6765

change more meaningfully we may need to wait for the late July politburo meeting.

Qiushi magazine published an article on the importance of healthy development of the Jennifer Zhong

platform economy. Whether this could represent a subtle policy change signal remains Economist

S1460516050002to be seen.

jennifer-a.zhong@ubs.com

+86-105-832 8324

May official Manufacturing PMI fell but (1) this was mostly seasonal (index is supposed

to have been adjusted for seasonality but it still shows clear seasonality), (2) it is not a

good predictor of official hard data: it wasn’t particularly strong in 1Q, nor did it show

much weakness in April. This doesn’t necessarily mean it’s not a good gauge of the

underlying economy.

Industrial profit growth was strong in April.