China is the second-biggest economy in the world with a GDP of more than $11 trillion. Over the years, the country has emerged to be the most important country in the world. This is because of its state as the world’s biggest producer and the biggest consumer. As such, investors interpret its data to be a measure of how good or how bad the economy is doing.
Earlier today, the country released its GDP data for June and the second quarter. The headline number was the Q2 GDP data, which showed that the economy grew by an annualized rate of 6.2%. This was a slower growth than the 6.4% that traders were expecting. It was the lowest it has been in more than 27 years. On a QoQ basis, the economy expanded by 1.6%, which was better than the expected 1.5%. In the first quarter, the economy expanded by a QoQ rate of 1.4%.
The industrial production rose by an annualized rate of 6.3%, which was higher than the expected 5.2%. In May, the production had grown by 5.0%. This data is important because it shows the performance of the country’s industrial sector, which is the biggest in the world. Data released in April and May showed that the production increased by 8.5%.
The Fixed Asset Investment increased by an annualized rate of 5.8%. This was higher than the expected 5.6%. This data shows the growth in investments of fixed assets like buildings and equipment by companies and machineries.
In June, retail sales increased by an annualized rate of 9.8%. This was better than the expected 8.5%, which was also better than the 8.6% experienced in May. On the negative side, the unemployment rate increased from 5.0% to 5.1%.
The data from China will indeed be the focus among investors. It comes at a time when the country’s relations with the US are at historic lows. This is as the two countries flex their muscles on the global stage. The US has added tariffs on Chinese goods worth more than $250 billion. It has threated to add tariffs on goods worth more than $300 billion. In recent months, reports of companies moving from China to other countries like Vietnam and Bangladesh has increased.
China has responded by adding tariffs on certain goods from the US. Some of the goods that have been tariffed are soybeans and American technology goods. It has also responded by providing support to the economy by providing stimulus.
In response to the data, the Australian dollar, which is viewed by investors as a proxy to the Chinese economy rose. This is mostly because of the growth in the industrial and fixed asset investments. The pair reached a high of 0.7033, which was higher than the 21-day and 14-day moving averages. The RSI has moved above the overbought level of 70. The pair will likely continue moving higher to test the important level of 0.7050.