Every recent economic report out of China comes with disappointment.
- The retail sales chart above highlights China's ongoing challenge in shifting from an export-driven economy to a consumer-based economy.
- If retail sales continue to disappoint, it will weigh heavily on ETFs such as the Global X China Consumer ETF (CHIQ | B-39).
- However, retail sales aren't the only disappointing economic results coming out of China this year:
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- PPI and CPI data have been weak, indicating lower-than-expected demand from business and consumers
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- Exports have fallen off: Although a drop in exports is welcomed as the government attempts to wane the economy from its export-dependency, the declines have far exceeded expectations and may point to a "hard landing."
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- Industrial production recently "missed" expectations by the most in recent memory.
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- Fixed-asset investment is at its lowest level in more than a decade.
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- Official government PMI figures are barely expansionary, and alternative measurements—such as those produced by HSBC and Markit—indicate contraction.
- Cumulatively, the weak data will weigh heavily on some of the most popular China ETFs:
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- Large Cap: iShares China Large-Cap ETF (FXI | B-52)
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- Total Market: SPDR S&P China ETF (GXC | B-41, Analyst Pick)
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- Small Cap: Guggenheim China Small Cap ETF (HAO | C-29, Analyst Pick)
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- Consumer Theme: Global X China Consumer ETF (CHIQ | B-39, Analyst Opportunity)
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- A-Shares: db X-trackers Harvest CSI 300 China A-Shares (ASHR)
