Standard Chartered economists Hunter Chan and Shuang Ding report that China's July real activity data revealed weaker momentum, with estimated monthly Gross Domestic Product (GDP) growth falling below 4.3% year-on-year [1]. The economists highlight a divergence in the economy, noting strong supply and relatively robust external demand contrasted with weak domestic demand [1].
The July Politburo meeting reinforced expectations that policy support in the second half of the year will focus on existing measures [1]. Standard Chartered anticipates that fiscal policy will take the lead, with faster budget implementation and broad fiscal spending expected to accelerate after a decline in the first half of the year, thereby boosting investment [1].
Monetary policy is also expected to remain accommodative, with liquidity kept ample. The economists maintain their forecast for a 25 basis point reserve requirement ratio (RRR) cut in the third quarter [1].
No specific market reactions or analyst opinions beyond Standard Chartered's outlook were mentioned in the article [1].
CONCLUSION
China's July economic data showed weaker-than-expected growth, prompting expectations for accelerated fiscal support and continued accommodative monetary policy. Standard Chartered forecasts a 25bps RRR cut in Q3 as authorities aim to offset weak domestic demand and support investment.