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China’s Slowdown Concerns Decline amid Strong Data

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China’s slowdown concerns

China’s slowdown has been cited as the biggest risk for the global economy. Last year and at the beginning of 2019, there was a flurry of soft data points from China. Several companies including Apple (AAPL), NVIDIA (NVDA), and Caterpillar (CAT) also admitted that China’s slowdown is hurting their earnings.

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Recent data points

However, some of the recent data points show signs of bottoming out in China. On April 17, China released several economic indicators including its first-quarter GDP. The country’s economy expanded at an annualized pace of 6.4% in the first quarter, which beat the estimates of 6.3% growth. China is targeting 2019 GDP growth of 6.0%–6.5%. Earlier this month, the IMF increased China’s 2019 growth forecast to 6.3% from 6.2%. HSBC expects China’s economy to expand 6.6% this year.

Before the GDP, China’s March manufacturing PMI and exports data also looked encouraging. However, the country’s March imports were worse than expected. Read China’s March Trade Data Offered Mixed Signals to learn more.

Stimulus measures

China has taken several measures to support its sagging economy. The country relaxed the norms for the housing sector, announced tax cuts, and went slow on its deleveraging exercise. These measures slowly seem to be supporting the Chinese economy. The country is also negotiating a trade deal with the US (SPY) to end the bitter trade war.

Optimism about the US-China trade talks boosted US and Chinese stocks (TCEHY). Alibaba (BABA) and JD.com (JD) have gained 35.5% and 42.9%, respectively, year-to-date.

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