China's major state-owned banks are actively buying offshore yuan in an attempt to stabilize the currency amid a darkening economic outlook and strain in the property sector, raising the cost of shorting the Chinese yuan and leading to a rally in the currency's value.
Chinese stocks rebounded briefly after Beijing implemented measures to halt the slide, but foreign investors used the opportunity to unload $1.1 billion of mainland Chinese equities, reflecting ongoing nervousness about holding capital in China.
Consumer spending in China rebounded in August, with all categories, including apparel, automotive, food, furniture, appliances, and luxury, experiencing increased sales compared to July, according to a survey by the China Beige Book. Retail sales in July rose by 2.5% year-on-year, raising concerns about China's economic growth, but the August survey showed a surge in spending, particularly in the services sector, which saw continued strength in travel and hospitality. Additionally, corporate borrowing increased as the cost of capital declined, indicating a boost in business activity. However, China's property sector continued to worsen, with house prices barely growing and home sales declining.
Chinese consumer spending has rebounded in certain sectors, but concerns persist over the property market and GDP growth falling below 5%, according to Shehzad Qazi, managing director of China Beige Book.
China's stock market rebound may be temporary as corporate earnings continue to decline and companies revise down their outlooks, causing concern for foreign funds and prompting Bank of America to urge caution.
The onshore yuan dropped to a 16-year low against the dollar, reflecting growing pessimism towards China's economy and financial markets.
China's consumer price index rebounded in August after slipping into deflation in July, indicating a post-Covid economic recovery, despite sluggish domestic consumption and concerns of a relapse into deflation in the coming months.
The Chinese yuan bounces back from a 16-year low as the central bank vows to stabilize the currency and take necessary actions to correct market moves.
China's credit demand improved, deflationary pressures eased, and the yuan rallied, indicating signs of stabilization in the economy and financial markets after a sharp downturn.
China's central bank will take measures to boost demand, support price rebound, and create a favorable monetary and financial environment to enhance economic vitality, according to an unnamed senior central bank official.
China's offshore yuan weakened after the country's central bank announced a cut in banks' reserve requirement ratio, which aims to support the economy but could further worsen the decline of the yuan.
China's economic data for August shows a mixed picture, with retail sales and production on the rise, property investment declining, and the urban jobless rate ticking downward, leading experts to believe that while there may be modest improvements in growth, a strong recovery is still unlikely.
China's credit is expanding rapidly, with total social financing increasing by over 3 trillion yuan in August, mainly driven by government financing, indicating positive signs of economic stabilization and recovery from the slump in the second quarter. Additionally, recent policy measures, particularly in fiscal and property sectors, are expected to further stimulate the economy.
China maintains benchmark lending rates unchanged as signs of economic stabilization and a weakening yuan lessen the need for immediate monetary easing.
China's small economic rebound appears to have stalled in September, with weak retail sales, manufacturing production, and loan growth, raising concerns about anemic third-quarter growth and the country falling short of its growth target.
Asian markets are expected to rebound following a relief bounce around the world on Wednesday, with currency traders keeping an eye on inflation reports from across the continent.
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