Goldman's weekly tracker shows diverging marginal trends in China activity: travel, ports, and oil demand improving, while real estate and policy finance remain weak

Overview

This report is Goldman Sachs' weekly high-frequency tracker of China's economic activity and policy, covering four major areas: consumption and travel, production and investment, other macro activity, and markets and policy. The report emphasizes that, to more closely track the impact of energy price supply shocks on China's economic activity, this tracker is now published weekly.

Core views

The main message is that economic activity shows structural divergence: new home sales remain weaker than last year, while existing home sales are relatively better; travel-related indicators are gradually approaching last year's levels; within industrial chains, steel demand, steel output, and coastal daily coal consumption show marginal improvement; port and shipping activity is rising; the high-frequency oil and gas demand nowcast is improving, but policy bank support remains soft and funding rates have edged higher.

Analysis framework

The report uses high-frequency economic indicators and a policy event table for cross-sectional tracking, separately observing property sales, flights, traffic congestion, energy prices, chemical prices, consumer confidence, PMI employment, steel, coal consumption, special-purpose bonds, policy finance, port freight, crude inventories, repo rates, the RMB exchange rate, and macro policy announcements.

Methodology notes

• Macro High-Frequency TrackingWeekly Tracker of China Economic Activity and Policy

  Four-group high-frequency indicator framework

  The report divides indicators into four groups—consumption and travel, production and investment, other macro activity, and markets and policy—to observe short-term marginal changes in China's economy.

• Commodity Demand EstimationGS oil demand nowcast

  China oil demand high-frequency nowcast

  Goldman's commodities team uses high-frequency data to estimate China's oil demand. The report says the latest nowcast reading rose to 16.4mb/d and distinguishes it from the supply-demand balance table updated once every six weeks.

• Data Methodology NoteTraffic congestion data source switch

  Coverage difference between Gaode map and Baidu map

  The report notes that starting in 2022, the traffic congestion data source was switched from Gaode map to Baidu map; Baidu covers 98 cities, while Gaode covers 100 cities.

Asset mapping & comparison

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

• China macroeconomy

  Core tracking target

  Strengths

  Some high-frequency indicators such as travel, ports, oil demand, steel, and coal consumption have improved at the margin.

  Weaknesses

  New home sales remain below the same period last year, and policy bank support is soft.

  Comparison

  Many indicators are benchmarked against the same period last year, showing structural divergence rather than a broad-based recovery.

  Risks

  Energy price shocks, property weakness, and weaker-than-expected policy transmission could affect growth.

• Oil, gas, and crude demand

  Important macro activity and commodity signal

  Strengths

  Goldman's China oil demand nowcast latest reading rose to 16.4mb/d.

  Weaknesses

  Brent prices continued to decline, and the energy price environment remains volatile.

  Comparison

  The report distinguishes between the high-frequency nowcast and the supply-demand balance estimates updated every six weeks.

  Risks

  Supply shocks and price volatility could alter judgments on demand and inventories.

• Real estate

  An important drag on the consumption and investment chain

  Strengths

  Existing home sales in 16 cities remained above the same period last year.

  Weaknesses

  New home sales in 30 cities declined last week and were below the same period last year.

  Comparison

  Existing homes are outperforming new homes, indicating an uneven market recovery.

  Risks

  If new home sales remain weak, they may weigh on property investment and related industrial chains.

• Steel and industrial activity

  High-frequency proxy indicators for production and investment

  Strengths

  Steel demand and steel production both rose slightly last week, and coastal daily coal consumption was above the same period last year.

  Weaknesses

  The improvement was described as slight, still insufficient to confirm a strong recovery.

  Comparison

  Compared with property sales, industrial-chain indicators show more marginal improvement.

  Risks

  If investment projects fall short of expectations, steel demand could decline.

• RMB and money market

  Indicators of the market and policy environment

  Strengths

  The RMB appreciated against the CFETS basket and remained range-bound against the USD.

  Weaknesses

  Interbank repo rates edged up last week, indicating marginal tightening in liquidity conditions.

  Comparison

  The overnight rate remains below the 7-day OMO rate, suggesting funding rates have not yet clearly broken above the policy anchor.

  Risks

  Liquidity volatility, shifts in exchange rate expectations, and policy signal adjustments may affect market pricing.

Key data

• New home sales in 30 citiesSlight decline last weekStill below the same period last year.
• Existing home sales in 16 citiesDeclined last weekBut still above the same period last year.
• Domestic flights and cancellation rateFlight volumes recovered toward last year's level, while cancellation rates declinedShowing marginal improvement in travel activity.
• Traffic congestionReturned to normal after the Dragon Boat FestivalCurrently near the same period last year.
• Refined oil products and BrentDomestic gasoline and diesel prices were unchanged, while Brent continued to fallEnergy price tracking remains a key focus of the report.
• Consumer confidenceNBS rose slightly in May, Morning Consult rebounded last weekConsumption sentiment indicators improved at the margin.
• Steel demand and productionBoth rose slightlyProduction- and investment-related activity improved.
• Daily coal consumption in coastal provincesRange-bound fluctuationAbove the same period last year.
• Local government special-purpose bondsRMB 2.04bn issued year to dateData presented as stated in the report text, updated to the Jul 03 issuance plan.
• Policy bank supportStill soft in JuneReflecting that policy financial support has not yet clearly strengthened.
• Port activityContainer throughput and outbound cargo vessel freight volumes increasedBoth indicators were above the same period last year.
• China oil demand nowcast16.4mb/dThe latest reading rose slightly.
• China visible seaborne crude inventoriesDeclined in the final week of JuneTogether with oil demand tracking, it provides clues on energy activity.
• Interbank repo ratesEdged up last weekThe overnight rate remained below the 7-day OMO rate.
• RMB exchange rateAppreciated against the CFETS basket, fluctuated within a range against the USDThe counter-cyclical factor implied by the USDCNY fixing has declined recently.

Impact & implications

For investment research, this report suggests that China's macro activity is neither improving nor weakening in a one-way direction; instead, weak property-related activity coexists with improving travel and port activity as well as marginal recovery in industrial and energy demand. On the policy side, investors still need to monitor how special-purpose bonds, policy bank support, consumption stimulus, investment project lists, and changes in the monetary policy framework transmit to growth momentum.

Risks

• High-frequency indicators are highly volatile week to week, and a single week's improvement does not necessarily indicate a trend reversal.
• Energy price supply shocks may continue to affect judgments on China's economic activity and oil and gas demand.
• New home sales are below the same period last year, and the property chain may still drag on growth.
• Policy bank support remains soft, and there is uncertainty around policy implementation strength and transmission speed.
• Changes in funding rates and RMB fixing signals may affect market risk appetite.

What to watch

• The subsequent direction of new home sales in 30 cities and existing home sales in 16 cities.
• Whether domestic flight volumes, flight cancellation rates, and urban traffic congestion continue to approach or exceed the same period last year.
• Linked changes in Brent, domestic gasoline and diesel prices, and chemical product prices.
• Whether steel demand, steel output, and daily coal consumption in coastal provinces can sustain improvement.
• The execution strength of local government special-purpose bond issuance, policy bank support, and macro policy announcements.
• Port container throughput, outbound cargo vessel freight volumes, China oil demand nowcast, and crude inventories.
• Interbank repo rates, the 7-day OMO rate, CNY, the CFETS basket, and the counter-cyclical factor implied by the USDCNY fixing.