"Next week in China" fra Lundgreen's Capital

Major Data Releases:

• 16 April: China to hold press conference on 2026 Q1 national economic performance
• 16 April: China to report March industrial production data
• 16 April: China to report March energy production levels
• 16 April: China to report March investments in fixed assets (excluding rural households)
• 16 April: China to report March real estate sales
• 16 April: China to report March total retail sales (TRS) of consumer goods
• 16 April: China to report 2026 Q1 households’ income and consumption expenditure
• 16 April: China to report 2026 Q1 industrial capacity utilization rate
• 16 April: China to report March housing prices
• 17 April: China to report 2026 Q1 quarterly value added of major industries (preliminary)

The coming week will be particularly busy for major economic data releases for China, with 10 indicators scheduled.

For retail sales, we expect year-on-year growth to moderate to 2.3 per cent in March from 2.8 per cent previously. On the positive side, offline consumption continued to recover over the month. High-frequency indicators suggest that commuting activity continued to pick up while subway passenger volumes also improved relative to the previous period, providing some support to retail sales. 

However, March retail sales growth still faced several constraints given base effects and sustained weakness in auto sales. Consumption had recovered in March 2025, raising the base for this year’s reading to soften year-on-year expansion. Price dynamics also had a mixed effect: tensions in the Middle East have pushed up global oil prices, with domestic fuel prices adjusting higher accordingly. While this may provide some nominal support for TRS growth, higher fuel costs also raise household travel and logistics expenses, thereby squeezing disposable incomes for auto purchases, discretionary goods, and other services. 

For fixed asset investments, we expect growth of 2.7 per cent year-on-year for January-March. By sector, infrastructure investment is likely to maintain double-digit growth, manufacturing investment may edge up modestly, while property investment is expected to maintain a decline of around -10 per cent year-on-year. Policy support for stabilising investment has strengthened materially, suggesting the investment outlook for 2026 should not be underestimated. Financing conditions from special bond issuances and new policy-based tools are likely to boost manufacturing and broad infrastructure investment, pointing to a solid start to the first quarter of the 15th Five-Year Plan period. Power-related investment is also likely to remain an important segment.

We expect industrial value-added growth for firms above designated size to come in at 5.5 per cent in March. Main headwinds are likely to come from 2025’s high base and the timing shift of the Lunar New Year. Industrial value-added rose by 7.7 per cent in March last year, while this year’s earlier holiday appears to have led to some production frontloading in January and February, leaving some payback pressure in March. Still, high-frequency indicators and Purchasing Managers’ Index (PMI) readings continue to point to resilient industrial momentum. Manufacturing PMI returned to expansion territory at 50.4 in March while the production and new orders indices rose to 51.4 and 51.6, respectively, suggesting a broad-based improvement in both supply and demand. Recovering new export orders, a narrower decline in producer prices, and improving corporate profitability and production willingness should also lend support, while equipment and high-tech manufacturing remain important structural drivers. 

Equity markets rebounded strongly over the week. As of Thursday, 9 April, the MSCI China Index had risen 2.6 per cent while the Shanghai Composite was up 2.22 per cent. The Shenzhen Component and ChiNext indices also gained 4.82 per cent and 5.51 per cent, respectively. Small- and mid-cap stocks marginally outperformed large caps, while growth sectors generally outperformed value peers.

Looking ahead, global risk appetite may continue to recover at the margin ahead of formal US-Iran negotiations. That said, the A-share earnings season is likely to be a source of uncertainty through the end of April, while the broader implications of developments in the US-Iran situation have yet to fully play out. Against this backdrop, A-shares are likely to trade in a wide range over the near term, with volatility potentially increasing. Nevertheless, the foundations of China’s current market rally remain intact, and we remain constructive on the medium- to longer-term outlook. 

This piece has been co-produced with Yiyi Capital Limited in Hong Kong, a China specialist and a part of a global financial services group.

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