China’s real GDP growth slowed to 6.2% y/y in Q2 as trade activity weakened and producer prices flirted with deflation, while June credit, industrial output, and retail sales data showed modest improvements. Property construction continues to support cyclical economic momentum, but the stronger data points seen in June were largely attributable to one-off factors, and should not be interpreted as fruits of policy support. Headwinds to continued cyclical activity growth in the second half of 2019 include both the US-China trade dispute and a probable slowdown in corporate credit growth following the Baoshang Bank takeover.
