“In general, the growth recovery is on track and seems to be accelerating in terms of year-on-year growth, beating market expectations. SHUANG DING, CHIEF ECONOMIST FOR GREATER CHINA AND NORTH ASIA, STANDARD CHARTERED, HONG KONG Today’s GDP data, stronger than what we expected, implies an upside risk to this outlook, although this is tempered by the possibility of tighter macro policy.” “Our current forecast has GDP growing at about 6% y/y in H2, bringing growth to between 2% and 2.5% in 2020, followed by over 8% growth next year. Export orders have remained weak but given the resilience of China’s exports so far, we expect exports to pick up gradually along with the recovery of global demand. “We expect the upturn to continue in the second half, supported by improved sentiment after the successful containment of COVID-19 and significant fiscal and monetary policy easing.

“The 3.2% y/y expansion of China’s GDP in the second quarter underscores the robust recovery that China’s economy is going through after the historic contraction of 6.8% y/y in the first quarter. LOUIS KUIJS, HEAD OF ASIA ECONOMICS, OXFORD ECONOMICS, HONG KONG Consumption may gradually recover in the third quarter, with big-ticket items like car sales already recovering in June.” “That impact seems more like a one-off, and China has managed to contain that outbreak and seems to be doing quite well. But it is not all bright spots, with retail sales below expectations which I think is partially due to the mini outbreak in Beijing. “The key driver has been net exports, not only from a goods perspective but from a service perspective as well. Given this new information, I think it’s a good chance China could try for 3% growth for the full year. “Frankly speaking, I think this was quite strong and much stronger than my expectations (of around 1%). TOMMY XIE, HEAD OF GREATER CHINA RESEARCH, OCBC BANK, SINGAPORE That cautiousness is something the market is looking at in terms of countries where the consumer plays a bigger role, so that’s obviously relevant for the U.S. “It’s very much a story of government stimulus-led recovery, which is very much focused on the industrial side. “While in general it’s fair to say that the numbers beat expectations, what the numbers also reveal is that we’re seeing that the China consumer remains behind in terms of the recovery story.”

COMMENTARY: RODRIGO CATRIL, FX STRATEGIST, NAB, SYDNEY Asian equities started Thursday with mild losses and remained lower after the release of China data.

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