Energy shocks are pushing up price pressures, while exports and some high-frequency activity show a phased recovery

Overview

This report is the 55th edition of J.P. Morgan’s China alternative data tracker chartpack, focusing on the impact of energy shocks on prices, transportation, production, and consumption activity, as well as high-frequency changes in China’s exports, autos, real estate, fiscal conditions, and monetary conditions in April. The report argues that China’s first-quarter growth was still supported by global commodity demand, but domestic demand remained soft, and energy shocks, tariffs, and uncertainty in external demand will put cooling pressure on subsequent momentum.

Core views

The report’s core judgments include: first, exports are not weakening across the board, as container and dry bulk shipping partially recovered in April, and shipments to the U.S. also rebounded from March lows; second, tanker-related transport has weakened significantly, reflecting the impact of energy supply disruptions on activity and prices; third, rising energy, petrochemical, and fertilizer prices are creating upward inflation pressure, but the government’s refined oil price smoothing mechanism weakens the full pass-through of international oil prices to retail gasoline; fourth, auto retail sales, especially traditional passenger vehicles, remain under pressure, while new energy vehicles saw a narrower decline; fifth, real estate transactions have turned positive year over year, but price and sentiment indicators remain weak, so whether the market has truly bottomed remains uncertain; sixth, fiscal issuance continues to provide support, while the central bank has net withdrawn liquidity through open market operations so far in April.

Analysis framework

The report uses high-frequency alternative data to map official monthly economic activity, cross-validating indicators such as vessel departure and arrival deadweight tonnage, container freight rates, flight cancellation rates, tire and steel mill operating rates, auto retail sales, home transactions, government bond issuance, open market operations, and energy and commodity prices against industrial production, exports, housing, inflation, and policy conditions.

Methodology notes

• Macro high-frequency trackingMapping high-frequency alternative data to official activity

  Use weekly, daily, and intra-month data to anticipate the direction of official monthly economic activity

  The report maps tire factory operating rates to auto industrial production, rebar operating rates to steel industrial production, home sales in 30 cities to real estate activity, and departing vessel deadweight tonnage to export trends, thereby observing economic momentum before official data are released.

• Inflation transmission analysisEnergy price shock transmission

  The impact of changes in global energy and petrochemical prices on domestic retail prices and PPI/CPI

  The report tracks prices of LNG, LPG, gasoline, diesel, petrochemical products, fertilizers, grains, pork, and industrial commodities, and notes that the government’s price smoothing mechanism means the pass-through from international oil prices to domestic retail gasoline prices is incomplete.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Crude oil, LNG, LPG, gasoline, and diesel

  Core carriers of the energy price shock

  Strengths

  Elevated prices can support upstream energy-related revenues and significantly increase market attention to inflation and supply disruptions.

  Weaknesses

  High energy costs will suppress demand for autos, chemicals, logistics, and household consumption.

  Comparison

  Coal prices have risen more moderately, while LNG, LPG, gasoline, and diesel have posted more pronounced increases.

  Risks

  If the Middle East conflict and supply disruptions persist, they may prolong the price shock and intensify macro uncertainty.

• China export and shipping chain

  A high-frequency observation window for external demand and trade recovery

  Strengths

  Containers, dry bulk, and shipments to the U.S. have partially recovered in April, and some CCFI routes have risen by more than 5%.

  Weaknesses

  Total departing deadweight tonnage is still dragged down by tanker transport, while uncertainty over external demand and tariffs remains high.

  Comparison

  The improvement in containers and dry bulk is stronger than in tanker transport, and shipments to the U.S. have improved markedly from March.

  Risks

  Tariffs, cooling external demand, and disruptions in energy transport may make the export recovery unstable.

• Autos and new energy vehicles

  An industry cross-sensitive to household consumption, manufacturing production, and energy prices

  Strengths

  The decline in new energy vehicle sales is smaller than that of overall passenger vehicles, and tire factory operating rates suggest auto industrial production may improve in April.

  Weaknesses

  Passenger vehicle retail sales fell 26% yoy, affected by lower subsidies, changes in purchase tax incentives, and rising fuel costs.

  Comparison

  The -14% decline in new energy vehicles is relatively more resilient than the -26% decline in overall passenger vehicles.

  Risks

  If high fuel costs, subsidy rollbacks, and weak consumer confidence persist, auto retail sales may remain under pressure.

• Real estate chain

  An important indicator of domestic demand and the credit cycle

  Strengths

  New home sales in 30 cities and existing home sales in major cities have turned positive year over year so far in April.

  Weaknesses

  The Centaline sales manager confidence index and the existing home listing price index have fallen, so price stabilization remains uncertain.

  Comparison

  Transaction improvement is stronger than price and sentiment indicators, showing an unsynchronized recovery in volume and price.

  Risks

  If home price expectations and homebuyer confidence do not improve, the rebound in transactions may be insufficient to confirm a real estate bottom.

• China government bonds and liquidity

  The policy mix of fiscal support and monetary conditions

  Strengths

  Government bond issuance has remained steady so far in April, ultra-long special treasury bonds have begun to be issued, and this will later support capital replenishment for major state-owned banks.

  Weaknesses

  The central bank has net withdrawn liquidity through open market operations, so short-term liquidity support has not strengthened across the board.

  Comparison

  The fiscal side is more proactive, while the monetary side has shown net withdrawal so far in April.

  Risks

  If fiscal funds are slow to translate into physical workload, or if liquidity withdrawals affect financial conditions, the effect of policy support may lag.

Key data

• China GDP in the previous quarter6.7% ar，5% oyaGrowth was supported by resilient global commodity demand, but domestic demand remained soft.
• Tanker departures so far in April-1.5% oya，-20% m/m nsaWell below the first-quarter average of +31.5% oya, indicating weaker tanker transport.
• Shipments to the U.S. so far in April+2.3% oya，+14.4% m/m nsaA clear recovery from March’s -10.1% oya and -13.8% m/m nsa.
• Passenger vehicle retail sales from April 1 to 19-26% oyaAffected by lower vehicle trade-in subsidies, reduced purchase tax exemptions, and higher fuel costs, among other factors.
• New energy vehicle sales from April 1 to 19-14% oyaThe decline was smaller than that of overall passenger vehicle retail sales.
• Government bond issuance so far in April9850亿元人民币Including RMB 539 billion of treasury bonds, RMB 174 billion of special local government bonds, and RMB 217 billion of refinancing local government bonds.
• Net withdrawal via outright open market operations so far in April4000亿元人民币The central bank has net withdrawn liquidity through outright OMO.
• Net withdrawal via pledged open market operations so far in April7380亿元人民币The central bank has net withdrawn liquidity through pledged OMO.
• Growth in new home sales in 30 cities+8.3% oyaTurned positive year over year so far in April, versus -6% in March.
• Growth in existing home sales in major cities+8.4% oyaTurned positive year over year so far in April, versus -6.3% in March.
• Agricultural and food prices so far in April-2.3% oyaShifted from +3.5% oya in March to a drag on overall CPI.
• Wholesale pork prices so far in April-28.7% oyaThe decline widened from -21.4% oya in March, reflecting continued industry overcapacity.

Impact & implications

For investment and macro judgments, the report suggests that China’s short-term economy is showing divergence: foreign trade logistics and some production indicators are improving, but energy supply disruptions and rising prices are increasing inflation and cost pressures; weaker auto retail sales indicate that household consumption and marginal changes in policy subsidies are still affecting end demand; the improvement in real estate transactions has not yet translated into a clear stabilization in prices and sentiment; fiscal issuance is still supporting the economy, but liquidity operations show that monetary conditions are not easing in only one direction.

Risks

• Continued energy supply disruptions could keep LNG, LPG, gasoline, diesel, and petrochemical prices elevated.
• Tariffs and uncertainty in external demand could weaken the sustainability of the export recovery.
• The decline in auto retail sales reflects pressure on end consumption, and changes in subsidies and tax incentives may continue to affect demand.
• The year-over-year improvement in real estate transactions has yet to be confirmed by price and sentiment indicators, so the bottoming judgment remains uncertain.
• Net withdrawals through the central bank’s open market operations may marginally tighten the short-term liquidity environment.
• The sharp drop in pork prices and weaker food prices indicate that overcapacity and insufficient demand in some industries are still continuing.

What to watch

• Whether container, dry bulk, and tanker departures continue to diverge over the rest of April and into May.
• The subsequent impact of the Middle East conflict, energy supply, and the domestic refined oil pricing mechanism on CPI and PPI.
• The impact of shipments to the U.S., U.S. soybean imports, and tariff changes on the China-U.S. trade chain.
• The recovery in passenger vehicle and new energy vehicle retail sales after changes in subsidies and rising fuel costs.
• Whether new home sales, existing home sales, listing prices, and the sales manager confidence index in 30 cities can improve simultaneously.
• The issuance of ultra-long special treasury bonds, arrangements for capital replenishment of major state-owned banks, and the pace of fiscal fund deployment.
• Whether PBOC open market operations shift from net withdrawal toward clearer liquidity support.