JPM: CN 2Q24 GDP Reflects Continuing Econ Recovery; 5% Annual Growth Target Expected to be Feasible

　　Zhu Chaoping, Executive Director and Global Market Strategist at JPMorgan Asset Management, said the latest quarterly GDP data and monthly economic activity data (including industrial production, retail sales and fixed asset investment) released by the National Bureau of Statistics (NBS) indicated that the Chinese economy is continuing to recover, driven by strong supply-side investment and output, while the demand-side is still facing challenges amidst weakening consumer demand.

　　Against this backdrop, Zhu considered the stronger-than-expected growth in Mainland exports to have played an important role in bridging the gap between domestic supply and demand. At the same time, the strong export growth also reflected the improved productivity and efficiency of the Chinese manufacturing sector, although potential geopolitical headwinds also point to the urgency of boosting consumer confidence in the country.

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　　On the policy front, Zhu believed the PBOC is likely to be cautious in upgrading its easing measures due to the pressure on the RMB exchange rate. In addition, the high leverage of local governments may limit the scope for fiscal stimulus, leading to a disappointing pace of credit expansion last quarter.

　　Zhu estimated that the PBOC may have more room for monetary easing if the US Fed cuts rates in September. There is also still room to enhance policy coordination and improve the efficiency of support measures after the Third Plenum of the CCP Central Committee.

　　Taking all these factors into account, he found it feasible for China to achieve the 5% annual GDP growth target, and the performance of the Mainland market is expected to remain resilient.

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