Mixed Oct economic data reflects an uneven recovery. Resilient industrial production (IP) growth was underpinned by China’s rising electric car industry and related industries. Stronger-than-expected headline retail sales were driven by low base effects as underlying spending growth remained soft. Nevertheless, car sales were a bright spot. Real estate investment continued to drag down overall investment growth. Increased fiscal and monetary support will help sustain the recovery. Fiscal policy has turned more supportive and is expected to aid growth and ease debt pressure on cashstrapped local governments. The PBoC injected long-term liquidity equivalent to a 25bp RRR cut today in a bid to maintain sufficient interbank liquidity. We expect monetary policy to stay accommodative to facilitate a continued recovery.
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