From Capital Economics this time:
• China’s economy stabilised in Q1 thanks to a marked improvement in activity last month. Admittedly, the latest surge in industrial production is hard to take at face value and is likely to be partially reversed in the coming months. And some downside risks to broader growth remain. But the big picture is that policy stimulus is clearly working and should help to shore up China’s economy in the coming quarters.
• GDP growth held steady at 6.4% y/y last quarter, marginally beating expectations (both the Bloomberg median and our forecast were 6.3%). Our own measure of growth, the China Activity Proxy (CAP), also held broadly steady last quarter, though it points to a lower expansion rate of around 5.3%. (See Chart 1.) We won’t get a detailed breakdown of GDP until tomorrow. But the headline breakdown suggests that an acceleration in industry offset a slowdown in service sector activity.