China recovery shows mixed signals
Surveys and export strength suggest China’s first‑quarter growth likely picked up, but weak domestic demand and caution in the bond market are tempering that view. Some market strategists remain upbeat — Stephen Jen of Eurizon SLJ Capital said stocks could still rise about 10% by year‑end on policy support — while other reports flag reflation driven more by commodities than by broad consumer demand. (digitaljournal.com; scmp.com; bloomberg.com)
China’s economy appears to have regained some speed in early 2026, but the rebound is still leaning more on exports than on spending at home. (usnews.com) A Reuters poll of 50 economists put first-quarter growth at 4.8% from a year earlier, up from 4.5% in the October-to-December quarter. China is due to publish first-quarter gross domestic product and March activity data on April 16 at 0200 Greenwich Mean Time. (usnews.com) The near-term lift has come from factories and foreign demand. Exports surged nearly 22% in January and February, industrial output rose 6.3%, and retail sales increased 2.8%, according to official data reported by CNBC. (cnbc.com) Those numbers still show an uneven recovery. CNBC said the 2.8% retail-sales gain was slower than the 4% rise a year earlier, while urban unemployment edged up to 5.3% and real-estate development investment fell 11.1% in January and February. (cnbc.com) That split between strong supply and softer demand has been building for months. KPMG wrote that China grew 5.0% in 2025, but fourth-quarter growth slowed to 4.5% as external demand became the main driver while consumption and investment stayed subdued. (kpmg.com) KPMG also said retail sales rose 3.7% in 2025, exports grew 5.5%, and fixed-asset investment fell 3.8%, with private fixed-asset investment down 3.1% for a third straight annual decline. The firm said Beijing’s 2026 policy focus is strengthening domestic demand while reducing inefficient capacity. (kpmg.com) Bond investors are signaling that they do not yet buy a full reflation story. The South China Morning Post reported that China’s one-year sovereign yield fell 5.5 basis points over three weeks, the 10-year yield fell 1.6 basis points, and the CSI 300 stock index slipped about 1% over the same stretch. (scmp.com) Economists told the South China Morning Post that March price gains looked driven more by commodity costs than by stronger household demand. Oil and gas prices rose 5.2% from a year earlier in March, while producer prices rose 0.5%, ending a 41-month deflation streak. (scmp.com) Not everyone is cautious. Bloomberg reported that Stephen Jen and Joana Freire of Eurizon SLJ Capital said Chinese stocks could rise 10% by the end of 2026, with 5% to 10% earnings growth supported by what they called dovish regulation and still-cheap valuations. (bloomberg.com) The next test is whether April 16 data show households and property joining the rebound instead of exports carrying it alone. For now, the numbers point to an economy growing faster than late 2025, but not yet broadly stronger. (usnews.com; cnbc.com; scmp.com)
