😨 China’s economy slowed across the board in July with factory activity and retail sales disappointing, suggesting the world’s No. 2 economy is losing traction
‼️ China Retail Sales rose 3.7% Y/Y in July, well below consensus of 4.6%. This is the weakest reading since November 2024. On a month-over-month basis, retail sales declined for a second consecutive month, by -0.1%. ‼️China Industrial Production rose 5.7% Y/Y in July, missing consensus of 5.9% and slowing from June's 6.8%. This marks the weakest pace of growth since January. The sequential M/M growth rate also slowed to 0.4%. 🔴 China Economic data👇 ▶️ July retail sales 3.7% y/y [Est.4.6%] ▶️July industrial growth 5.7% y/y [Est.5.9%] ▶️Jan-Jul fixed asset investment 1.6% y/y [Est.2.7%] ▶️ July Unemployment 5.2% [Prev. 5.1%] Note that while China's industrial production continues to run well above the pre-COVID trend, real retail sales have diverged further away from the pre-COVID trend. Source: Augur Infinity
Tencent on Wednesday reported a 15% jump in second-quarter revenue as a strong performance in its gaming unit and AI investments boosted growth.
The ADR is up 7% today $TCEHY Tencent Q2 FY25: Revenue +15% Y/Y to RMB185B ($25.7B). Gaming +22% Social Networks +6% Marketing Services +20% Fintech & Business +10% Weixin/WeChat: 1.4B MAU (+3% Y/Y). Capex +119% to RMB19B ($2.7B). Source: App Economy Insights @EconomyApp
🔴 China state media says Nvidia H20 chips not safe for China
▶️ Nvidia's new tab H20 chips pose security concerns for China, a social media account affiliated with China's state media said on Sunday, after Beijing raised concerns over backdoor access in those chips. The H20 chips are also not technologically advanced or environmentally friendly, the account, Yuyuan Tantian, which is affiliated with state broadcaster CCTV, said in an article published on WeChat. ▶️ "When a type of chip is neither environmentally friendly, nor advanced, nor safe, as consumers, we certainly have the option not to buy it," the article concluded. ▶️ H20 artificial intelligence chips were developed by Nvidia for the Chinese market after the U.S. imposed export restrictions on advanced AI chips in late 2023. The administration of U.S. President Donald Trump banned their sales in April amid escalating trade tensions with China, but reversed the ban in July. ▶️ China's cyberspace watchdog said on July 31 that it had summoned Nvidia to a meeting, asking the U.S. chipmaker to explain whether its H20 chips had any backdoor security risks - a hidden method of bypassing normal authentication or security controls. Source: www.investing.com, Reuters
Donald Trump has extended a trade war truce with China for another 90 days, two US officials have said, just hours before his Tuesday deadline to steepen tariffs on the world’s biggest exporter.
Source: FT
Nvidia and AMD agreed to pay 15% of China chip sales revenue to US government
According to this FT article, Nvidia and AMD have agreed to give the US government 15 per cent of the revenues from chip sales in China, as part of an unusual arrangement with the Trump administration to obtain export licenses for the semiconductors. ▶️ The two chipmakers agreed to the financial arrangement as a condition for obtaining export licences for the Chinese market that were granted last week, according to people familiar with the situation, including a US official. The Financial Times reported on Friday that the commerce department started issuing H20 export licences on Friday, two days after Nvidia chief executive Jensen Huang met President Donald Trump. The US official said the administration had also started issuing licenses for AMD’s China chip. ‼️ The quid pro quo arrangement is unprecedented. According to export control experts, no US company has ever agreed to pay a portion of their revenues to obtain export licences. But the deal fits a pattern in the Trump administration where the president urges companies to take measures, such as domestic investments, for example, to prevent the imposition of tariffs in an effort to bring in jobs and revenue to America. Link to article: https://lnkd.in/eZXmhSBP Source: FT
China’s July exports top expectations, rising over 7%; imports record biggest jump in a year ‼️
▶️ Exports climbed 7.2% in July in U.S. dollar terms from a year earlier, customs data showed Thursday, exceeding Reuters-polled economists’ estimates of a 5.4% rise. ▶️Imports rose 4.1% last month from a year earlier, marking the biggest jump since July 2024, according to LSEG data. The data also indicated a recovery in import levels following June’s 1.1% rebound. Economists had forecast imports in July to fall 1.0%, according to a Reuters poll. ▶️On a year-to-date basis, China’s overall exports jumped 6.1% from a year earlier, while imports fell 2.7%, customs data showed. China’s trade surplus this year, as of July, reached $683.5 billion, 32% higher than the same period in 2024. Source: Augur Infinity @AugurInfinity, CNBC
The chart below shows the number of companies founded in China each year.
Private entrepreneurialism fueling China’s economic rise has come to a full stop there. Time will tell what will be the consequences of a pivot to a state run economy again. Source: Michel A.Arouet, FT
If you put a punitive tariff of 25% on India for importing Russian oil, you have to do the same for China, which is an even bigger buyer.
That means China tariffs go from 50% to 75% (and 20% in Jan. '25). Will it be applied on China as well??? Source: Robin Brooks
