GDP growth slows to 7.5% yoy, down from 7.7% in Q1, but broadly in line with (a few) consensus estimates of 7.5-7.6%. We believe that the government is now heading towards some modest policy easing.
In today’s NBS data release, IP and FAI growth rates are slightly weaker than consensus, while retail sales growth accelerated in real terms. Specifically, IP growth decelerated to 8.9% yoy in June from 9.2% in May. Heavy industries remained the drag on the overall economy: for example, pig iron production grew at 2.9% yoy in June, crude steel production grew 4.6%. Nominal FAI growth slowed by 0.3ppts to 20.1%yoy in Jan-June from Jan-May. However, after taking into account the lower-than-expected PPI in recent months, real investment growth remained largely stable.
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