Which activities are covered by the improvement in travel and confidence?

  • Over the past week, the number of domestic passenger flights in China increased, flight cancellations fell and urban traffic congestion rose, with travel-related indicators strengthening together. The Morning Consult consumer confidence measure also recovered somewhat.
  • These changes were concentrated in travel activity and confidence. To monitor more closely the impact on China’s economy of the supply shock from rising energy prices, Goldman Sachs changed the tracker to a weekly publication; domestic gasoline and diesel prices were unchanged this week.

Housing transactions are recovering, so why is it too early to call it a broad-based strengthening?

  • Over the past week, daily new-home transactions across 30 cities rose slightly but remained well below their year-earlier level; daily existing-home transactions across 16 cities recovered to a level above that of a year earlier. The improvement in transactions was uneven between new and existing homes.
  • The recovery in transactions coincided with continued pressure on prices: National Bureau of Statistics data showed that existing-home prices across 70 cities continued to decline slightly in September, while rental yields in major cities were broadly flat. The improvement in volumes has not yet been accompanied by a corresponding recovery in prices.
  • Year-on-year transaction comparisons are also affected by the shift in the timing of the National Day holiday, and data for the holiday period may be incompletely updated. Short-term transaction trends and comparisons with a year earlier therefore need to be understood in the context of this timing window.

Do production and logistics provide consistent signals about economic activity?

  • Industrial performance was mixed: over the past week, steel demand fell, steel output was stable and average daily coal consumption in coastal provinces increased slightly. The seasonally adjusted Emerging Industries Purchasing Managers’ Index (EPMI) also edged up in October. Production activity and steel demand did not strengthen in tandem.
  • The logistics picture was more positive: official port container throughput rose slightly over the past week and was well above its year-earlier level; cargo volumes on vessels departing 20 major ports also increased. This points to stronger port freight activity, though its coverage differs from that of domestic steel demand.
  • Goldman Sachs’ latest nowcast of Chinese oil demand rose to 17.1 million barrels per day, while visible onshore crude inventories also increased over the same period. The higher demand estimate coincided with inventory accumulation and cannot be directly equated with tightening inventories.

How far has fiscal support progressed?

  • As of the report date, cumulative local government special bond issuance for the year reached 3.82 trillion yuan, close to the level at the same point last year; cumulative government bond issuance reached 9.61 trillion yuan, equivalent to 81% of the full-year issuance quota. These figures reflect bond issuance progress.
  • The denominator for 81% is the full-year quota approved in the budget at the National People’s Congress and Chinese People’s Political Consultative Conference meetings in March; it excludes off-budget bond quotas approved subsequently. Separately, according to the policy list, the Ministry of Finance recently allocated 550 billion yuan from unused local government debt limits; this should be distinguished from cumulative issuance.
  • Housing support has also entered its implementation window: the nationwide mortgage interest subsidy policy announced on 29 September took effect on 1 October. However, the tracker continued to show weak year-on-year new-home transactions and falling existing-home prices in September, indicating a time lag between policy announcements and improvements in activity data.

What changed in money markets and exchange rates?

  • Over the past week, interbank repo rates and overnight repo rates declined slightly; the renminbi appreciated against both the US dollar and the CFETS currency basket. Funding costs and exchange rates changed at the same time.
  • The China–US yield spread shown in the report narrowed to 330 basis points but remained wide by historical standards. On 19 October, the central bank signaled a shift toward an overnight policy rate and a broader interest-rate benchmark, a change in the direction of the policy framework.