The Chinese economy still needs close attention.

Recently, China's GDP growth in the second quarter was reported at 0.8%, lower than the forecast of 0.5% and significantly slower than the 2.2% growth in the previous quarter. Looking at the annual GDP growth, it was recorded at 6.3% in the second quarter, below the expected 7.3%. The Chinese government has revised its GDP growth forecast for the year to 5%, down from the previous target of 5.5%.

The relatively weak GDP growth has led to increased scrutiny from investors, who are closely watching the Chinese government to see if it will implement stimulus measures to boost economic growth. Additionally, the continuous depreciation of the Chinese yuan due to uncertain economic recovery and concerns about the potential occurrence of stagflation are also being monitored. The situation has raised questions about how the government will address these challenges.

In terms of employment, the unemployment rate in China reached 5.2% in June 2023, the lowest in the past 16 months. The unemployment rate for individuals aged 25-59 was 4.1% in June, while the rate for those aged 16-24 hit a historic high of 21.3% (up from 20.8% in May). This has resulted in an increase in average weekly working hours for employees across various organizations throughout the country, reaching 48.7 hours in June, up from 48.6 hours in the previous month.

Boosting the Chinese economy may become increasingly challenging as government debt has significantly increased in just one month, particularly in June. However, other economic indicators show positive signs of growth in China. Retail sales have been consistently increasing since the beginning of the year, and industrial production has shown continuous growth for 14 consecutive months.

The real estate market, which contributes up to one-fourth of China's GDP and is a key target in President Xi Jinping's efforts to reduce debt, is still facing persistent difficulties. Investment in the real estate sector declined by 20.6% in June compared to the previous year, after experiencing a 21.5% decline in May.

The yield on China's 10-year government bonds stands at 2.7%, nearing its lowest level in 10 months. This comes despite the People's Bank of China cutting the one-year and five-year loan prime rates by 10 basis points in June to support economic growth. Investors expect further policy easing from the central bank to stimulate the economy, as several major banks have lowered their GDP growth forecasts for China in 2023.

Techical analysis data (5H)

Resistance: 7.1758, 7.1787, 7.1845

Source: Investing.com

Pivot Points June July 18, 2023 01:57 PM GMT+7