China macroeconomic activity Report Interpretation

Overview

This China macro tracker uses high-frequency indicators to assess activity ahead of official data. JPMorgan finds a mixed August and early-September picture: exports and fiscal implementation are improving, providing support for its expected second-half recovery, while retail demand, housing and parts of industrial production remain weak.

Core views

JPMorgan characterizes August activity as mixed. Industrial production rebounded on export strength, but retail sales were soft and fixed-asset-investment contraction remained elevated. Its central constructive development is a long-awaited fiscal catch-up: faster government bond issuance and the rollout of an RMB80bn policy-bank tool are expected to support the institution’s anticipated second-half recovery. Trade trackers point to firmer export volumes. Departing non-tanker ship deadweight tonnage rose 5.8% year on year in August and 16.1% month to date in September. US-bound shipping rose 14.8% year on year in September month to date, though it was down 5.7% month on month seasonally unadjusted, compared with 13.5% year-on-year growth and 18.7% month-on-month growth in August. Bulk-ship departing and arriving tonnage rose 19.6% and 15.9% year on year, respectively. Oil-tanker arrival tonnage increased 1.0% year on year and 16.9% month on month seasonally unadjusted in September month to date, suggesting a recovery in oil imports after customs data showed a 23.4% year-on-year fall in August. Freight rates increased on several routes, including US East Coast, US West Coast and Persian Gulf/Red Sea routes, while Mediterranean and Europe rates declined. The report also highlights agricultural trade as a policy-sensitive signal. China’s soybean imports from the world were flat year on year in August, while imports from the US reached their highest July level. Following the Trump-Xi summit, a White House statement said China would purchase at least US$17bn of US agricultural products annually from 2026 to 2028. JPMorgan identifies progress on agricultural purchases as a visible and potentially achievable indicator of continued US-China economic engagement ahead of President Xi’s planned US visit. Production signals are uneven. Refinery utilization suggests processed-crude production contraction may narrow in September as improved crack spreads lift refiners’ margins. Tire-plant operating rates imply auto-production growth may weaken relative to August, when output was down 2.7% year on year. Steel-rebar operating rates suggest steel industrial-production contraction may deepen from August’s 5.5% year-on-year decline. Meanwhile, passenger-car retail sales fell 19% year on year in September 1–6, partly reflecting lower per-car trade-in subsidies and purchase-tax exemptions; NEV sales fell a narrower 3%. Petroleum-asphalt and coke-oven operating rates recovered, while steel-rebar and tire operating rates were stable. Fiscal issuance is the report’s principal policy-support channel. Government bond issuance reached RMB1.56tn in September month to date, including scheduled issuance for the following week, and JPMorgan expects the monthly total to approach RMB2tn. This would lift year-to-date issuance progress toward 80% and close roughly half of the 11-percentage-point shortfall accumulated through August. Central-government-bond issuance surged to RMB1,066bn month to date from RMB451bn in August; general CGB issuance reached RMB861bn versus RMB241bn, and special CGB issuance was RMB205bn. Year-to-date CGB issuance stood at 72.5% of the annual target, versus last year’s 81.1% pace. Special local-government-bond issuance was RMB395bn month to date, with year-to-date progress at 75.5% of the target versus 79.9% last year. The RMB80bn policy-bank tool began deployment in early September to supplement project equity capital and unlock financing for infrastructure, AI, advanced manufacturing, new energy and other strategic sectors. Monetary operations were not presented as an additional easing impulse. The PBOC withdrew a net RMB325bn through pledged open-market operations while keeping liquidity unchanged through outright OMOs. It conducted RMB2.3tn of overnight reverse repos during September 14–17, which JPMorgan views as consistent with the central bank’s ongoing transition toward overnight reverse repos. Housing remains a key macro drag despite a relative improvement in secondary transactions. New-home sales in 30 major cities were still down 5.4% year on year in September month to date, only modestly better than August’s 6.9% decline. Secondary-home sales accelerated to 18.2% year on year from 4.2% in August. Asking prices remained subdued, although the sales-manager confidence index improved following late-August policy easing. JPMorgan argues that the August 28 reform package, which phases out the pre-sales model and reshapes developer financing, entails a near-term adjustment: price-decline fears may extend the quantity correction, tech-sector strength cannot fully offset the housing drag, and the longer-run equilibrium likely involves a smaller property sector alongside near-term fiscal headwinds. September land-sale values also declined, weighing on government fund-account revenues. Inflation indicators show stronger industrial-price pressure but weaker food prices. Brent rose to about US$100 per barrel in mid-September, its highest level in four months, amid renewed Strait of Hormuz and Red Sea tensions. Domestic gasoline, diesel, LNG and LPG prices rose toward their March–April highs, while coal increased sharply amid production curbs following stricter safety inspections. Petrochemical prices surged, with methanol and petro-benzene reaching two-year highs. Conversely, agricultural food prices fell 1.1% year on year in September month to date after being flat in August, potentially widening their drag on headline CPI. Pork-price deflation narrowed to 17.9% year on year from 20.9%, while copper and aluminum remained elevated despite a mild weekly decline; cement and steel-rebar prices rose, partly reflecting stronger construction activity and higher coal costs.

Analysis framework

JPMorgan maps high-frequency indicators to official monthly activity data. It combines port and vessel-tonnage data, freight rates, refinery and factory operating rates, auto-retail data, bond issuance, PBOC operations, housing transactions, land sales and commodity-price trackers to judge changes in trade, production, fiscal impulse, property activity and inflation before full official releases.

Methodology notes

• Industry AnalysisSupply-demand framework

  High-frequency activity and price tracking

  The report uses shipping volumes, operating rates, sales data and commodity prices as timely indicators of demand, production and price conditions before official monthly statistics are released.

• Macroeconomics

  Fiscal and monetary policy transmission tracking

  Government-bond issuance, policy-bank funding and PBOC operations are tracked to assess how quickly public financing and liquidity operations may translate into investment and broader activity.

Key data

• Departing non-tanker ship tonnage5.8% yoy in August; 16.1% mtd in SeptemberPort tracker indicating stronger export-volume momentum.
• Government bond issuanceRMB1.56tn in September mtd; expected to approach RMB2tn for SeptemberExpected to lift year-to-date issuance progress toward 80%.
• Central government bond issuanceRMB1,066bn in September mtd versus RMB451bn in AugustYear-to-date issuance reached 72.5% of the annual target, versus 81.1% at the same pace last year.
• Passenger-car retail sales-19% yoy during September 1–6NEV sales declined 3% year on year.
• Housing salesNew-home sales -5.4% yoy; secondary-home sales +18.2% yoy in September mtdCompared with -6.9% and +4.2%, respectively, in August.
• Agricultural food prices-1.1% yoy in September mtdVersus flat in August, potentially increasing the drag on headline CPI.

Impact & implications

The report argues that stronger exports and a more forceful fiscal rollout provide the main support for a second-half recovery. However, consumer weakness, a structurally adjusting property market, uneven production conditions and declining land-sale revenues limit the breadth of the improvement.

Risks

• Housing price-decline fears could prolong the adjustment in transaction volumes.
• The housing sector’s near-term correction and weaker land sales could create fiscal headwinds.
• Retail weakness and continued contraction in new-home sales may restrain broader activity despite export and policy support.

What to watch

• Whether September government bond issuance approaches RMB2tn and narrows the year-to-date issuance shortfall.
• Deployment of the RMB80bn policy-bank tool and its ability to unlock financing for strategic-sector projects.
• Progress in China’s agricultural purchases from the US ahead of President Xi’s planned US visit.
• Whether export shipping indicators sustain their September improvement.
• The evolution of new-home sales, asking prices and the near-term effects of the August 28 housing reform package.