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July data indicates a slowdown in aggregate economic momentum, with growth decline seen in IP, retail sales, FAI and main property activity indicators.
A striking divergence, the "K-shaped" split between the "new economy" (tech and high-end manufacturing) and the "traditional economy" (consumption and real estate), is happening in Chinese economy.
While factors, like the renewed risk of conflict in the Middle East, and natural disasters such as typhoons, heavy rainfall, and extreme heat, exerted some short-term negative pressure on the productions of certain sectors, overall demand remained weak, necessitating further policy stimulus.
Government may accelerate the pace of project pipeline development and the disbursement of funds. We expect infrastructure investment to pick up from September onwards.
We maintain the view of USD/CNY to reach 6.65 by the end of 2026
