Goldman Sachs Releases Weekly Tracking Report on China’s High-Frequency Economic Activity and Policy

Overview

Goldman Sachs released its weekly updated 'Tracking China’s Economic Activity and Policy' report on May 8, 2026. Due to the ongoing impact of the energy supply shock, Goldman Sachs has elevated this tracking to a weekly frequency. The report employs four categories of high-frequency indicators—consumption & mobility, production & investment, other macroeconomic activity, and markets & policy—to help external observers rapidly assess the current state of China’s economy. Overall, the data reveal uneven sectoral performance: mobility and second-hand housing remain relatively strong, whereas new home sales and steel production are weaker; rising energy costs are pressuring downstream industries; meanwhile, monetary policy and exchange rate management have recently shown signs of modest proactivity.

Core views

Goldman Sachs presents high-frequency data across multiple dimensions, revealing notable divergence across sectors. Consumption & Mobility: Daily new home sales across 30 major cities were ~5.3% lower YoY (7-day moving average, unless otherwise noted), while second-hand home transactions across 16 cities rose ~11.0% YoY—reflecting an ongoing 'cool new homes, warm second-hand homes' dynamic in the property market. Domestic flight passenger volume declined ~3.2% YoY, and cancellation rates were 5.9 percentage points higher YoY—suggesting some softening in air travel demand. However, traffic congestion indices in major cities softened only marginally (~3.3% YoY), possibly reflecting holiday scheduling adjustments and shifting travel habits. During the Labor Day holiday, domestic tourist visits reached 140% of pre-pandemic levels, and tourism revenue climbed to 125% of pre-pandemic levels—though per-capita spending recovery lagged (at ~95%), total outbound travel volumes have rebounded strongly. Production & Investment: Tracked steel demand declined just ~0.5% YoY, suggesting underlying resilience in downstream activity; yet steel production fell ~3.9% YoY—indicating more pronounced contraction on the supply side. In addition, daily coal consumption across eight coastal provinces rose +2.1% YoY, signaling continued strength in electricity demand. Container throughput rose +5.6% YoY, indicating still-active import-export logistics; however, outbound vessel deadweight tonnage at the top 20 ports declined -5.1% YoY—revealing divergent trends between foreign and domestic trade volumes across different metrics. As of May 8, cumulative local government special bond issuance for 2026 accounted for only ~30.6% of the full-year quota—indicating a relatively slow issuance pace. Energy & Prices: Chinese gasoline and diesel prices surged sharply, driven by international crude oil (Brent briefly nearing USD 120/barrel), raising energy costs and exerting pressure on mid- and downstream industries. On oil demand, Goldman Sachs’ latest real-time estimate (nowcast) stands at ~16.4 million barrels per day—down from prior readings. Onshore visible crude oil inventories have remained volatile since the onset of the Iran conflict, with inventory days broadly ranging between 72–73 days. Markets & Policy: At the market interest rate level, the interbank 7-day repo rates (DR007 and R007) have both fallen to around 1.4%, near the People’s Bank of China’s 7-day open market operation (OMO) policy rate—signaling ample liquidity. On exchange rates, the CFETS RMB Index has strengthened recently, and the countercyclical factor has turned positive (approximately +800–900 pips), suggesting enhanced PBOC guidance on the RMB exchange rate. Regarding policy, the report lists several major macro initiatives introduced since March—including early childhood education reform, water conservancy infrastructure investment, relaxed home purchase restrictions in Shenzhen, new energy development support, and pilot free trade zone expansions—demonstrating sustained policy support for growth stabilization and structural transformation.

Analysis framework

Goldman Sachs constructs an immediate snapshot of China’s economy using four high-frequency indicator systems. The first category covers consumption & mobility: data on primary and secondary residential property transactions, air travel, and highway congestion directly monitor household consumption momentum and service-sector vitality. The second category focuses on production & investment: steel demand, steel output, daily power plant coal consumption, container throughput, and local government special bond issuance progress collectively depict industrial production and infrastructure investment intensity. The third category encompasses other macroeconomic activities: oil demand (estimated via Goldman Sachs’ proprietary nowcasting model and inventory analysis) and consumer confidence (blending Morning Consult and NBS data) provide additional cross-validation on the demand side. The fourth category examines markets & policy: repo rates, RMB spot and effective exchange rates, and the countercyclical factor help assess liquidity conditions and exchange rate management direction, while a policy event timeline highlights recent shifts in policy signals. This methodology emphasizes 'slice-by-slice' scanning of the economy at weekly—or even higher—frequency. Each edition avoids drawing unified conclusions, instead enabling readers to independently judge whether individual sectors are relatively hot or cold based on YoY changes, absolute levels, and comparisons with historical norms. Many embedded charts (e.g., daily new home sales across 30 cities, steel demand, special bond issuance progress) benchmark against同期 data from 2019 and 2025 to filter out seasonal distortions.

Methodology notes

• Macroeconomic frameworkCredit/debt cycle

  Local government special bonds serve as a critical tool for growth stabilization and local infrastructure financing; their issuance pace influences fiscal spending and physical workloads. The report tracks the ratio of cumulative issuance to the annual quota to gauge the timing and aggressiveness of fiscal policy stance.

  Persistently slow bond issuance may reflect cautious project approvals or pending fund disbursement; conversely, concentrated short-term issuance could translate into stronger subsequent infrastructure construction demand. This report shows issuance stood at ~30% of the annual quota as of early May—providing a useful vantage point to assess the scale and potential acceleration of fiscal support over the remainder of the year.

• Fixed Income & Credit AnalysisYield curve analysis

  The relationship between interbank 7-day repo rates (DR007, R007) and the policy rate (7-day OMO rate) serves as a barometer of liquidity conditions and money market transmission efficiency.

  DR007 reflects deposit institutions’ funding costs, while R007 reflects broader non-bank institutions’ costs; comparing both to the central bank’s open market operation rate reveals whether liquidity is loose and whether the interest rate corridor remains effective. Here, rates have converged near the policy rate—indicating abundant liquidity and easing near-term upward pressure on short-end rates.

• Corporate Fundamentals & Financial FrameworkOperating/Financial Leverage Analysis

  Comparing YoY changes in ‘demand’ versus ‘production’ metrics within the same industry helps assess capacity utilization, supply elasticity, and cost-driven profit pressures.

  In the steel sector, demand was nearly flat (-0.5% YoY), while production fell sharply (-3.9% YoY)—suggesting profit compression or environmental/energy constraints prompted voluntary output cuts. Such a marked divergence between demand and production often serves as an early signal of changing industry resilience and future price trends.

Key data

• YoY Change in Daily New Home Sales (30 Cities)-5.3% (as of May 7)Versus same period in 2025; new home market remains subdued
• YoY Change in Daily Second-Hand Home Sales (16 Cities)+11.0% (as of May 7)Second-hand home demand remains relatively resilient, showing steady recovery
• YoY Change in Domestic Flight Passenger Volume-3.2% (as of May 7)Slight softening in travel demand; cancellation rates rose concurrently
• YoY Change in Steel Demand-0.5% (as of May 8)Demand remains broadly stable, with only mild decline
• YoY Change in Steel Production-3.9% (as of May 8)Decline deeper than demand—signal of active supply-side contraction
• YoY Change in Daily Coal Consumption (Eight Coastal Provinces)+2.1% (as of May 5)Power consumption remains relatively strong, linked to temperature control and industrial activity
• Special Bond Issuance Progress (as of May 8)~30.6%Share of annual budget quota remains low, suggesting room for acceleration ahead
• GS Real-Time Oil Demand Estimate~16.4 million barrels per dayRecent decline partly reflects high oil prices dampening demand

Impact & implications

While this weekly tracking report does not offer explicit investment recommendations or directional market calls, the movements in its selected high-frequency indicators carry several implications. First, relatively warm mobility and second-hand home consumption contrast with cooler indicators like steel production and new home sales—pointing to structural divergence in aggregate demand. Second, rising energy prices are feeding through to domestic refined product prices, potentially sustaining cost pressure on transportation and industrial users—and possibly generating negative feedback on oil demand. Third, market rates have fallen to near the policy rate, and the countercyclical factor has turned positive—indicating the PBOC intends to maintain basic RMB exchange rate stability and sustain moderately ample liquidity. Fourth, local special bond issuance remains modest, implying that if issuance accelerates in coming quarters, further infrastructure and growth-support measures remain possible.

Risks

• Further increases in energy prices could amplify cost pressures on mid- and downstream enterprises and dampen end-consumer demand.
• Persistent weakness in new home sales and sharp steel production cuts may continue weighing on revenues of related supply-chain firms.
• Escalation of geopolitical conflict (e.g., the Iran war) could cause broader disruptions to crude oil transportation and supply chains, increasing uncertainty.

What to watch

• Whether local special bond issuance accelerates going forward—and how quickly resulting funds translate into physical infrastructure investment and real-economy demand.
• Changes in end-user demand around domestic refined product pricing windows, and how high oil prices evolve in their impact on transport and logistics firm profitability.
• Further adjustments to the PBOC’s countercyclical factor or reverse repo rates, to assess the direction and extent of proactive macro-policy fine-tuning.
• Weekly trends in physical indicators such as steel and coal—whether they show improvement—as potential leading signals of turning points in industrial activity.