It was supposed to be the next big moment for the bulls who have bet big on China’s reopening.
showed the biggest improvement in activity in more than a decade. Consumer mobility data was bouncing back. Even Chinese house sales rose for the first time in 20 months. Now, China is arguably being pretty sensible here. As Jonathan Garner, Morgan Stanley’s chief equity strategist in Asia,Chinese consumers have amassed savings of between $640 billion and $850 billion during the pandemic, equivalent to 7 per cent to 9 per cent of consumption.
Instead, as Commonwealth Bank economist Joseph Capurso notes, the quota for local government bonds for infrastructure was actually cut from 4.15 trillion yuan in 2022 to 3.8 trillion yuan in 2023, implying less demand for metals. “For Australia, the greater focus on consumption of services and lesser focus on infrastructure investment is less supportive for commodity demand than we expected,” Capurso says.