An expected Chinese data package was released today. The data was better than expected, with activity data for December, the fourth quarter and full 2022 GDP figures topping estimates.
December activity data
Industrial production : 1.3% yoy versus 0.2% yoy expected
Retail Sales: -1.8% MoM versus -8.5% MoM expected
Investments in urban areas: 5.1% year over year versus 5.0% year over year expected
Q4 2022 : 2.9% YoY versus 1.8% YoY expected
Q4 2022: Expected 0.0% QoQ vs -0.8% QoQ
Year 2022: 3%
While better-than-expected data is always welcome, China stock indices showed no signs of optimism and closed today’s session lower. Some analysts have already noted that not everything looks right with the data. UBS pointed out that 2.9% YoY GDP growth in Q4 2022 would most likely indicate that GDP growth for all of 2022 would be less than 2%! In addition, China’s National Bureau of Statistics said that China’s population decreased by 850,000 people in 2022, the first annual decline in population since 1961!
It is no news that official Chinese data is considered shady. However, the first population decline since 1961 is certainly something new and could have significant implications for China’s economy in the long run. If this were the start of a new trend with China, just like Western countries, which are struggling to grow their population, the economic outlook would deteriorate significantly.
Looking at CHNComp at the D1 interval, we can see that the index recently surged above the 7,250 resistance zone but struggled to maintain bullish momentum thereafter. The pullback that began this week led to a retest of the aforementioned 7,250 point zone, this time as support. There has not yet been a break down below, but if such a break occurs, the drop could deepen, with the 6,600 point area being the first target for sellers.
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