Arjen van Dijkhuizen, the senior economist at ABN AMRO, notes that China’s activity data for July published this week were weak as industrial production slowed to 4.8% YoY from June’s reading of 6.3%, the slowest pace in 17 years.

• “Retail sales slowed to 7.6% yoy (June: 9.8%, consensus: 8.6%). Fixed investment growth was marginally lower in July (5.7% yoy ytd) compared to June. Lending data for July published early last week were also weaker than expected. Bloomberg’s monthly GDP estimate dropped to a post global financial crisis low of 6.0% yoy, from June’s spike of 7.1%.
• While part of the weakness in July’s data seems to relate to payback from the surprisingly strong June data, the picture emerges that the Chinese economy is not out of the woods yet, with headwinds from the trade/tech conflict with the US having risen over the past months. We expect the authorities to step up fiscal and monetary easing (including RRR and interest rate cuts) to keep China’s growth slowdown measured.”