China: Disappointing economic data releases - BBH

Analysts at BBH note that China reported a series of disappointing data, and the yuan declined for the second consecutive session and the two-day slippage of 0.3% is the most since nearly seven months.  

Key Quotes

“Against its basket (CFETS) it fell (~0.2%) for the first time in more than two weeks.  Industrial output slowed to 6.4% in July from 7.6% in June.  Fixed investment in urban areas rose 8.3% through July, down from an 8.6% pace.  Retail sales slowed to a still heady 10.4% pace from 11.0% in June.”

“Separately, China indicated that sanctions against North Korea, agreed at the UN, will be implemented as of tomorrow.  These entail embargoes on North Korean coal, iron ore, iron, and seafood.    Roughly a third of North Korea's (~$3 bln) are thought to be impacted by the newest sanctions.”

“Meanwhile, the Trump Administration is expected to announce a new trade investigation into Chinese practices as early as today.  This time intellectual property rights may come under scrutiny.  The US has opened several investigations into Chinese trade practices.  Thus far action has been minimal, though note that some increase in countervailing duties is possible prior to a final decision.  President Trump has seemed to link his trade stance with China's cooperation with North Korea.  Yet it appears that for Chinese officials, Korea is one several strategic flash points with the new US administration, with claims on the South China Sea, arms sales to Taiwan, and the proliferation of US anti-missile defense systems in Asia.”