Chinese Economic Update - Week Ending 25th July
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As Global markets seem impervious to several political incidents the IMF looks to lower their Global Economic Outlook, however not all economies are seen as stagnating in 2014.
For the majority of 2014 we have heard that the Chinese economy is stagnating and that they will not reach their initial target of 7.5% growth. Seen as a key indicator of global economics the Chinese have implemented several stimulus programs in an attempt to keep the economy moving forward at a steady pace.
These programs have been instrumental in turning the ailing economy round from the poor first quarter of 2014. Major investment in infrastructure is opening up the country and bringing the provinces closer to the major cities. Rail, Road and Air networks are seeing huge investment and are seen as a key way to help boost trade. This along with tax breaks for smaller companies and several policy changes to banking regulations allowing for faster and greater lending has seen the economy gather pace since the Chinese New Year.
HSBC's Purchasing Manufacturing Index shows 52 for July, up from 50.7 in June and a return to stronger manufacturing productivity and is the highest in 18mths. Factory output is also on the increase and is up 17.3% for the first half of the year and this, with its increase in Retail Sales, up 12.4% on June is a sign that although foreign demand is waning, domestic demand for goods is helping keep the economy on track.
The economy actually expanded by 7.5% from April to June, beating the first quarter by 0.1% and in line with original forecasts.
With the issues in the Ukraine and the Middle East no closer to a resolution we could see the world's second largest economy benefit in the latter months of the year and we would not be surprised if growth of over 8% isn't achievable.
Hang Seng at 24,135.59 (-0.02%)
SSE Comp at 2,115.62 (+0.50%)
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