Exports and special local government bond issuance have slightly accelerated, but domestic demand and production remain uneven

Overview

This report updates JPMorgan’s China Alternative Data Tracking Chart Pack, focusing on high-frequency changes in exports, production, fiscal issuance, liquidity operations, real estate, and inflation prices since June. The core view is that with manufacturing PMI broadly stable, market attention is now on the hard data to be released in the next two weeks; high-frequency indicators suggest export volume and special local government bond issuance have accelerated, while domestic demand, real estate, and parts of industrial production remain weak.

Core views

On exports, port tracking shows that June outbound container and dry cargo shipments both accelerated; outbound vessel deadweight tonnage growth rose year-on-year from 7.7% in May to 17.2% in June, suggesting exports may rebound alongside price normalization. On fiscal policy, June government bond issuance was near May’s level, while special local government bonds rebounded materially, indicating a reactive speeding up in fiscal resource deployment; if current economic weakness persists, fiscal support may accelerate further in Q3. On monetary policy, the PBoC kept 7-day reverse repos as the main policy operating instrument and also launched overnight reverse repos; if growth downside pressure strengthens and inflation concerns remain contained, the probability of a rate cut rises. At the same time, passenger car retail, oil refining, new home sales, and some commodity prices continue to reflect weak demand.

Analysis framework

The report maps high-frequency alternative data to official monthly economic activity, including port vessel deadweight tonnage, CCFI route freight rates, flight cancellation rates, passenger car retail, industrial capacity utilization, government bond issuance, PBoC open market operations, 30-city housing transactions, land sales, and energy and agricultural commodity prices, using these indicators to look ahead on exports, industrial production, consumption, fiscal policy, monetary policy, real estate, and inflation trends.

Methodology notes

• Macro High-Frequency MonitoringAlternative Data to Official Economic Activity Mapping

  Infers monthly official data direction using high-frequency indicators such as ports, utilization rates, housing transactions, and prices.

  The report maps outbound vessel deadweight tonnage to export volumes, asphalt, tires, rebar, and coke-oven utilization to industrial production, 30-city housing transactions to real estate sales, and energy, agricultural, and industrial commodity prices to inflation pressure.

• Policy TrackingHigh-Frequency Fiscal and Monetary Policy Monitoring

  Uses government bond issuance progress and PBoC open market operations to gauge the pace of policy force.

  The report tracks issuance of CGB, special CGB, special LGB, general LGB, and refinancing LGB, as well as 7-day reverse repos, MLF, outright reverse repos, and overnight reverse repos to assess fiscal injection and liquidity support intensity.

Asset mapping & comparison

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

• China export chain

  Benefits from stronger port shipment volumes and freight rates

  Strengths

  Both month-on-month and year-on-year outbound container and dry cargo deadweight tonnage improved; CCFI continues to rise on routes to the U.S. East/West Coasts and the Middle East.

  Weaknesses

  Tanker arrivals remain weak, and some data may be affected by prices, route factors, and geopolitical disruptions.

  Comparison

  June outbound total vessel tonnage was up 17.2% year-on-year, much higher than 7.7% in May.

  Risks

  If external demand fades, trade frictions intensify, or freight rates become volatile, export improvement may not be sustainable.

• Special local government bonds and infrastructure-related assets

  Potential support from faster fiscal issuance

  Strengths

  Special LGB issuance rose from 1,610 billion yuan in May to 5,720 billion yuan in June, with year-to-date progress reaching 47.0% of the annual target.

  Weaknesses

  The report emphasizes that uncertainty remains regarding the real-world deployment of funds to projects.

  Comparison

  June’s special LGB issuance exceeded June of last year and caught up to last-year pace at this point.

  Risks

  Insufficient project pipelines, slow disbursement, or weak local fiscal revenues could weaken policy transmission.

• China real estate chain

  Fundamentals remain uneven

  Strengths

  Secondary housing sales in major cities grew 12.3% year-on-year in June, still improving.

  Weaknesses

  The year-on-year decline in 30-city new home sales widened from 1.4% in May to 7.3% in June, and land sales value remains below last year.

  Comparison

  Secondary housing continued to improve but at a slower pace than May’s +18.0%, while new-home sales weakened again.

  Risks

  Weak price expectations, buyer sentiment, and local land-sale revenues could prolong real estate adjustment.

• China auto and EV consumption chain

  Short-term drag on retail

  Strengths

  The new-energy vehicle decline is narrower than the broader passenger-car segment.

  Weaknesses

  Passenger car retail fell 21% year-on-year in June, while new-energy vehicles fell 7% year-on-year, affected by car-trade-in subsidies, purchase-tax waivers, and fuel costs.

  Comparison

  Auto sales are still viewed as a drag on overall retail sales.

  Risks

  Subsidy withdrawal, oil-price swings, and weak consumer confidence may continue to suppress sales.

• China money market and rates

  Liquidity support persists; rate cuts remain under consideration

  Strengths

  The PBoC provides liquidity support through 7-day reverse repos, MLF, and overnight reverse repos.

  Weaknesses

  The overnight reverse repo rate was not disclosed, showing that short-term policy focus remains on the 7-day reverse repo.

  Comparison

  The report sees a higher probability of a rate cut in the second half if downside growth pressure grows and outweighs inflation risk.

  Risks

  A relatively hawkish Fed, exchange-rate pressure, or renewed inflation risks could limit easing room.

Key data

• Outbound vessel deadweight tonnage (excluding tankers)June 2026: year-on-year +17.2%, May: +7.7%Points to improved export volume growth.
• Outbound container ship deadweight tonnageJune 2026: month-on-month +8.5%, year-on-year +4.6%Containers typically carry consumer goods, some machinery, and electronics.
• Outbound bulk carrier deadweight tonnageJune 2026: month-on-month +10.1%, year-on-year +20.9%Bulk vessels mainly transport grains, coal, iron ore, and steel-related bulk cargo.
• Incoming tankersJune 2026: year-on-year down more than 30%Still weak, similar to May.
• Government bond issuanceAbout 11,380 billion yuan in June 2026, about 11,400 billion yuan in MayTotal issuance is broadly flat.
• Special local government bond issuance5,720 billion yuan in June 2026, 1,610 billion yuan in May; cumulative progress to date is 47.0% of the annual targetIndicates reactive acceleration in the use of special-purpose bond proceeds.
• PBoC liquidity operationsIn June, net liquidity injection through 7-day reverse repos was about 5,826 billion yuan, 2,000 billion yuan was injected through MLF, and 3,000 billion yuan was drained through outright reverse reposThe PBoC also launched overnight reverse repos at the end of June.
• Passenger car retailJune 2026: year-on-year -21%; new-energy vehicles: year-on-year -7%Auto sales continue to drag on total social retail sales.
• New home sales in 30 citiesJune 2026: year-on-year -7.3%, May: -1.4%The contraction in new-home sales widened.
• Resale housing sales in major citiesJune 2026: year-on-year +12.3%, May: +18.0%Secondary housing sales continue to improve, but momentum has slowed.
• Agricultural food pricesJune 2026: year-on-year -0.5%, May: -0.9%The drag on CPI continues to narrow.
• Wholesale pork pricesJune 2026: year-on-year -28.3%, May: -28.5%Industry overcapacity keeps disinflation in pork prices elevated.
• Refined oil price adjustmentOn July 3, 2026, gasoline and diesel were cut by 950 and 915 yuan per ton, respectivelyThis was the largest adjustment of the year, reflecting a decline in global oil prices.

Impact & implications

The report’s asset and policy implications are largely structural: the external-demand chain and some export-related transport indicators improved, while the fiscal issuance pace could provide potential support to infrastructure and project investment; however, whether special bond funds translate into tangible physical output remains the key issue. On the demand side, weak passenger car retail and new-home sales suggest that the recovery base for consumption and real estate is still fragile. On monetary policy, PBoC operations continue to provide liquidity support, and if downside growth pressures persist, a 10-basis-point rate cut would more likely be a signaling move than strong easing. On inflation, declines in energy and petrochemical prices and continued pork disinflation imply limited near-term inflation pressure overall.

Risks

• The acceleration in special local government bond issuance does not necessarily mean funds quickly become physical project execution.
• Weakness in passenger car sales, new-home sales, and some industrial production high-frequency indicators could drag second-quarter and third-quarter growth momentum.
• Improved external demand may be affected by trade policy, shipping disruptions, and price factors, and its persistence still needs confirmation.
• A more hawkish Fed could make the external environment for China’s monetary easing more complex.
• Although energy and commodity prices have fallen, geopolitical shifts could still push costs higher again.
• Weak real estate sales and land conveyance could continue to depress local government special-fund income.

What to watch

• The hard economic activity data released in the next two weeks, to confirm whether June’s real growth momentum is genuine.
• Whether proceeds raised from special local government bonds are actually allocated to projects and converted into capital expenditure.
• Whether fiscal spending in Q3 accelerates further.
• Signals from the PBoC’s 7-day reverse repos, MLF, overnight reverse repos, and potential rate-cut messaging.
• Whether export volume, CCFI freight rates, and outbound vessel deadweight tonnage continue to improve.
• Passenger car and new-energy vehicle sales and changes in trade-in subsidy policy.
• New home sales in 30 cities, secondary home transactions, land sales, and the Zhongyuan Manager Confidence Index.
• The impact of energy, petrochemical, pork, and agricultural prices on CPI and PPI.