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Under (re)construction

China just published its 1Q24 GDP, with a 5.3% increase versus the same period last year. The figure is much better than the 4.5% expected by the market. China is shifting away from Real Estate investment into factory production (again) to maintain its economy afloat and control youth unemployment. Below this apparent strength, we can see that industrial output grew by 4.5% vs 5.5% expected and retail sales were up 3.1% vs 4.5% expected. And we also know that the way GDP is “calculated” is not necessarily the cleanest way to present economic growth, but China is managing its Real Estate crisis by going back to basics: produce (cheap) goods for local consumption and exports. The good news is that China may export deflation to the rest of the world at a time where prices seem to be trending up again. The other good news is that China is not getting involved (directly or indirectly) in any of the conflicts we are witnessing today. They are busy reconstructing their economy.

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