The good numbers

Cautious but promising signs emerge from China’s consumer demand landscape. According to China’s statistics bureau, consumer prices saw a 0.7% increase year-on-year in February, marking the first rise since August. The extended Lunar New Year holiday period, spanning 8 days instead of the usual 7, nearly matched pre-pandemic domestic spending levels.

In light of this encouraging inflation data, our nowcasts also hint of an improving underlying business case in China with the high-frequent data points touching +1 std.dev levels for the first time since the pandemic.

We have a full round-down on all the latest figures coming out of China in our article here.

The less good numbers

However, beneath the surface, the Chinese economy’s condition may be more precarious than indicated by the aggregate CPI.