China

The World Bank's July 7 China Economic Update reports that Q1 2026 GDP hit 5.0% year-on-year, but net exports and high-tech fixed-asset investment carried the headline while household consumption grew just 2.6% and real estate investment contracted 16.2%. The Bank describes Q2 momentum as 'softened,' consistent with a consensus forecast of around 4.6% for the quarter, which the NBS will confirm or revise on July 15. Both the World Bank and IMF identify the same structural constraint: a household savings rate of 32.4%, roughly three percentage points above its pre-pandemic average, that fiscal expansion rather than monetary easing is best positioned to address.

China's central bank extended its record lending rate pause on June 21, keeping the 1-year LPR at 3.00% and the 5-year at 3.50% for a thirteenth consecutive month, with no major bank forecasting a cut at the July 20 fixing. The PBOC's July 8 policy statement explicitly flagged the Q2 GDP release due July 15 as the operative variable, diagnosing weak domestic demand and external shocks while retaining an accommodative bias. Separately, the PBOC and HKMA jointly expanded the offshore RMB Business Facility from RMB200 billion to RMB500 billion on July 7, adding longer tenors — a move analysts characterized as offshore easing while the onshore rate remains on hold.