中国投资策略-中国经济透视：数字中国（2022年6月）

ab24 June 2022Global Research and Evidence LabChina Economic PerspectivesChina by the Numbers (June 2022)Our guide to Chinese monthly dataWhat the numbers are, what they mean, and the outlook going forward.May growth momentum rebounded modestlyWith Covid restrictions easing gradually in May, industrial production (+0.7%y/y), exports (+16.9%y/y), and investment activities improved, thanks to improving conditions of logistics and supply chain. In particular, auto production and sales rebounded notably from April, contributing to over 35% of IP growth rebound and over 40% of retail sales growth recovery. Retail sales registered a smaller y/y decline (-6.7%y/y), although catering sales remained in deep contraction. Property sales and new starts were still in sharp y/y decline albeit slightly less bad than April, with the seasonally adjusted volume rising a bit from April. FAI growth improved across the board (+4.7%y/y), with infrastructure FAI leading the uptick and manufacturing FAI edging up. See more in our comments on May activities, trade and credit.June activities: further recovery underwayThanks to easier Covid restrictions and more policy support, most of economic activities have been recovering further in June. In the first 20 days of June, 30-city property sales rebounded from a -48%y/y in May to -17%y/y, and auto sales up from -17%y/y to +24%y/y, offsetting soft truck freight traffic (-20%y/y) and port cargo throughput (-6%y/y). Meanwhile, people movement is also recovering, with 18-city subway passenger turnover improving from -42%y/y in May to -15%y/y mtd June. Therefore, our UBS Industry & Investment Index and Consumption & Service Index both narrowed y/y decline in June, likely with a positive reading in mid-June (see UBS China Activity Index). We expect supply chain and logistic disruptions to improve further and consumer movement to continue to recover, despite some lingering Covid uncertainties ahead. More policy support to come, but insufficient to fully offset headwindsThe government has ramped up policy support recently, and we expect more to come, including more tax rebate, faster bond issuance and easier LGFV financing to support more infrastructure investment, more liquidity injection, further credit rebound, and more explicit property policy easing. However, policies announced so far have been modest, and lingering Covid restrictions may limit the efficacy of macro policy support. We think policy stimulus in the pipeline, including the potential special treasury bond (not in our base case), will be insufficient to fully offset the downward pressures on growth from the Covid hit and ongoing property downturn. Growth to rebound in June and Q3, but Q2 GDP likely -8%q/q saarWe expect China’s sequential economic growth to rebound notably in June and Q3, assuming that the government refines Covid restrictions, ramps up more policy support and further reduces disruptions to transport and supply chain. However, lasting Covid restri