China's Economy Faces Double Whammy: Citi Warns of Weakening Demand and Adverse Weather
China's economy is at risk of further decline as Citi warns of a "double whammy" of adverse weather conditions and weakening demand. The government's growth target of "around 5%" could be in jeopardy, with economic activities deteriorating in August.
Industrial production is projected to slow to 4.5% year-on-year, while retail sales growth may soften to just 2.0% year-on-year. The auto sector is also facing challenges, with sales worsening to -4.4% year-on-year in August. Despite some support for restaurants from summer spending, fixed asset investment growth is expected to slow to 3.3% year-to-date.
On the external front, exports growth is expected to moderate to 6.8% year-on-year, while imports are likely to soften to around 4.0% year-on-year. Inflation trends are also changing, with CPI inflation forecasted to edge up to 1.0% year-on-year in August.
Despite the rapid pace of government bond issuance, credit demand from households and corporates is expected to remain subdued. The property sector continues to struggle, with new home sales down -24.3% year-on-year in the top 30 cities.
In summary, China's economy is facing significant challenges that could impact global markets and investors. It is crucial for individuals to stay informed about these developments and consider how they may affect their own finances and investments.