China Economic Comment: May activity data: not quite as weak as they look

Research evidence excerpt

China Economic Comment: May activity data: not quite as weak as they look

Global Research

16 June 2026ab

China Economic Comment Economics

ChinaMay activity data: not quite as weak as they look

Yu Song

Economist

May data were mixed. yu-za.song@ubs.com

+86-10-5832 8508

Jennifer ZhongProduction data indicates sequential growth was weak but showed meaningful recovery

from April's level.

S1460516050002

jennifer-a.zhong@ubs.com

Domestic demand side indicators were particularly weak. But the data quality of these +86-105-832 8324

indicators is not as high as production side data. There has been a crackdown on over- Grace Wang

reporting of economic data in recent weeks which complicates the reading of data, Economist

especially demand side data which are less directly related to GDP data. S1460524050003

grace-zc.wang@ubs.com

+86-105-832 8335

2Q GDP will fall below 4.5% YoY without a meaningful push in June. 4.5% is the

lower bound of the target range this year. GDP growth targets since 2024 are hard William Deng

targets which need to be reached. Although 1H growth will still be above 4.5%, the Economist

economy is entering 2H with a sub-4.5% reading which is clearly not a comfortable william-w.deng@ubs.com

+852-2971 6765

situation. We expect policy makers to take action to boost June data, especially those

closely related to GDP data such as IP. But this may not affect FAI data which can totally

diverge from GDP data.

There has been a tendency to wait and see strategy on domestic demand policy

as long as export growth remains strong. This can lead to a deadlock since part of

the strength of export growth comes from domestic demand weakness. But 2Q

headline growth has been so weak that even with strong exports growth we still will see

meaningful policy loosening.