China: Positive data vibes all around - BBH

Research Team at BBH, notes that China reported a host of data that was mostly better than expected. 

Key Quotes

“If recent developments have boosted the chances of more stimulus from Japan and the UK, today's data means that China's policymakers may have less of a sense that urgent action is needed.  China's economy grow 1.8% in Q2 for a 6.7% year-over-year pace. Industrial output rose 6.2% in June after 6.0% in May.  Economists had expected a further slowing.  Retail sales jumped to 10.6% year-over-year from 10.0% in May.  Here too the market expected weakness.  The investment was the exception.  It slowed to 9.0% from 9.6%. 

However, the price of this economic performance was a surge in new loans.  New yuan loans rose to CNY1.38 trillion from CNY985.5 bln in May.  The broader measure, which includes non-bank financial institutions (shadow banking) jumped to CNY1.63 trillion from CNY660 bln.    What this indicates is that Chinese officials are still not facilitating the deleveraging that some many observers and investors think is necessary.”