China Growth Is on a 'Moderating Trend,' JPMorgan's Ng Says

Economic Outlook - Despite the trade truce, economic numbers appear soft, necessitating a broader perspective [1] - Macro policy improvements in September of last year, along with front-loaded activity in Q1, led to solid data in Q4 of last year and Q1 of this year [2] - The underlying economic momentum is moderating due to trade tariff issues with the US and increasing external uncertainty [2][3] - The baseline expectation is for sequential growth of the Chinese economy to slow from approximately 66% quarter-on-quarter in Q1 to around 35% in Q2, and further to 3% in Q3 [3] - PMI numbers align with expectations of moderating economic momentum [4] Sector Performance - Diverging trends exist across different sectors, with China's exports to the US down 40% in April and May [5] - Sectors receiving policy support, such as training subsidies and equipment upgrades, are performing well [6] - The housing sector continues to be a drag on the economy and has not yet bottomed out [6] - Consumer sentiment outside of policy support areas remains at a historical low [7] Policy Implications - Domestic and consumption support are crucial for policy focus this year [7] - Subsidies for consumer durables and autos have shown some impact, but their effect will fade by year-end [7] - Further policy support, particularly for services consumption, is needed [8]