China’s macroeconomic data in May showed the effects of tightening credit conditions, with fixed asset investment and infrastructure investment growth reaching new lows. There is still a notable divergence between data showing sharp declines in credit, deposit, import volume, and raw industrial output growth, and more resilience among growth rates of import values and industrial value-added. The weakness in credit and activity growth suggests additional monetary easing steps are necessary and probable in the next few months.
