Official data confirms that the Chinese economy shrank in April, as covid and related restrictions hit the country hard.
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All indicators have pointed to a much more substantial deterioration in April. China’s situation is unlikely to normalize in May, making it very difficult to hit the target.
Liu He remains very influential, but bearish sentiment can hardly change unless real changes materialize or the top leader speaks out.
Long USD/CNH is an attractive bet now, as most indicators suggest that the RMB should weaken much more.
Foreign firms continued to receive more scrutiny than Chinese peers, especially in the semiconductor industry, as Beijing attempted to secure a stable supply.
April will be even worse than March, and the economic pain will last longer as the country struggles to control the highly transmissive variant.
Chinese authorities are battling the spiraling medical costs of covid while rushing to contain the spread of the omicron variant.