ING: Not A Great Month For PMIs But No Really Worrying Signs

In the wake of the latest round of official Chinese PMI data Iris Pang of ING notes that "the market has used the word "peaking" to describe China's economic growth. I do not agree. The growth rate is still positive, though it would be a lot lower in 2H21 than 1H21, mostly because of the change in base effects. When I look at the economy, the growth engines are still there. Consumption is moderately strong and is improving. For example, Covid in June affected consumption services in shops and restaurants but boosted online activities. External demand has yet to peak, and therefore China's exports could be stronger when Covid subsides elsewhere in the world. The Technology war, which is both a short-term and long-term risk for China has been addressed by the government, which has assigned Liu He to lead the advancement of technology. A more coordinated approach should be positive for technology growth in the long term. We are keeping our forecast (for GDP growth) at 6%YoY for 2Q21."