Greater China

Research evidence excerpt

Feng Zhu (852) 2800 1745

Jiayi Li (852) 2800-5229

JPMorgan Chase Bank, N.A., Hong Kong Branch

Tingting Ge (852) 2800-0143

Tongfang Yuan (852) 2800-0085

Greater China

China: July trade resilient despite mild easing; FX

reserves ticked up

RatingDog PMI confirms domestic softening

Taiwan: July CPI supports 2H disinflation trend;

exports ease on volume correction

Next week: China CPI/PPI, credit

Hong Kong SAR: June data show healthy domestic

conditions and firming export momentum

China entered 3Q on a softer-than-expected footing, with

broad-based PMI weakness highlighting continued domestic

demand softness. While AI-tech exports have kept trade resilient, rising external uncertainty is emerging as a key risk.

Despite ample untapped fiscal firepower, execution has yet to

gain traction, with year-to-date government bond issuance

lagging last year’s pace. Combined with rising local-government risk aversion ahead of the October 5th Plenum, this

increases the risk that fiscal support falls short of policy

intentions in 2H.

RatingDog PMI softer than expected

RatingDog’s July manufacturing PMI confirmed a softening

in domestic conditions, in line with key NBS readings (Figure

1). Domestic demand and production components slowed

notably, but remained in expansionary territory. Headline

index slowed to 50.9 from 51.7 in June, notably below expectations. New orders slowed to 50.9, down 1.8pts from June,

while the output reading eased to 51.5, down 1.4pts. Despite

renewed tensions (and a truce) in the Middle East, upstream

and input price pressures continued to cool. The decline was

asymmetric and greater in the output price index, which fell

at a faster pace, reflecting weak downstream pricing power

amid soft domestic demand.

52

50

48

46

2021

2022

2023

2024

pace of June’s industrial production rebound (1.0% m/m sa)

may not be sustained, in part due to the traditional production

off-season and severe weather disrupting normal production

in the month. Weak domestic conditions and increasingly

challenging external conditions point to greater pressures on

fiscal policy. Faster fiscal spending and accelerated deployment of bond proceeds may be needed to support investment

…