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May data underscore persistently weak consumption and investment in China, with continued property price declines weighing on overall growth.
Tech sector stood out as a lone bright spot, helped by strong external demand for China tech products and central government’s push for tech self-reliance and global competitiveness.
Looking ahead, investment is likely to remain the key stabilizer for China’s growth in remaining time of this year, underscored by the policy push for “six networks” projects—namely water systems, new-type power grids, computing infrastructure, next-generation communications, urban underground pipelines, and logistics.
The potential pickup in domestic activity in remaining time of the year helps to support our call for USD/CNY to reach 6.7 by Q3, and 6.6 by Q1, 2027 (link).
