China economic slowdown deepens
Key Questions
What do China's May PMI figures show?
Factory activity stalled with PMI at 50 and contracting export orders, while services PMI remained strong at 54.4.
What challenges does China's property sector face?
The sector continues to drag with only a 71% collection rate and exits by major developers like Vanke and Shoukai.
Is policy stimulus expected in China?
Mixed economic signals suggest stimulus may be needed to address weakening domestic demand and fragile employment growth.
Factory activity stalled in May (PMI 50), export orders contracting, input costs high from Iran conflict. Services PMI remains strong at 54.4 but employment growth fragile. Property sector drag continues with 71% collection rate and Vanke/Shoukai exits. Mixed signals suggest policy stimulus may be needed to counter domestic demand weakness. Despite slowdown, foreign appetite for RMB assets remains strong: Deutsche Bank issued its second Panda bond in 2026 (RMB 3.5B at record-low coupons), oversubscribed.