China Economic

Monitor
Issue: 2024 Q4

November 2024

kpmg.com/cn
Key takeaways
• China's GDP grew 4.8% year-over-year (YoY) in the first three quarters of 2024. GDP grew 4.6% in Q3 2024, 0.1 percentage points lower than that of Q2 2024,
in line with market expectations. On a quarter-over-quarter basis, the economy grew by 0.9% in Q3, lower than the average growth rate in the past five years.
The slowdown is partly caused by weak modest domestic demand, contracted production, and low industrial capacity utilisation. On the other hand, exports
rose by 6.0% YoY in Q3 2024 thanks to continuous improvement in external demand. China’s trade with emerging markets has seen fast growth, reflecting
strengthened regional collaborations. Meanwhile, the optimisation of the structure of export commodities continues and exports are expected to remain
resilient this year.
• Consumption picked up momentum, growing from 2.6% in Q2 to 2.7% in Q3. The government applied ultra-long special treasury bonds to support the
Consumer Goods Trade-In Programme in Q3, boosting durable goods consumption. With the reduction of existing mortgage rates and additional allowances to
target groups, consumers’ willingness to spend is expected to further rebound in Q4 2024.
• The manufacturing investment growth rate dropped slightly to 8.8% in Q3 from 9.3% in Q2 due to the poor profit performance of the industrial sector in Q3. As
production capacity is declining and implementation of equipment renewal policies is accelerating, manufacturing investment is expected to stabilise in Q4
2024.
• Growth of infrastructure investment jumped to 11.9% in Q3 2024 from 7.2% in Q2, mainly driven by the significantly accelerated pace of government bond
issuance since the July Politburo meeting. Thanks to the issuance of bonds, general fiscal expenditure growth jumped from -4.1% in the Q2 to 3.3% in Q3.
• Real estate investment growth rate declined by 10.1% in Q3 2024. High inventory pressure prompted enterprises to stay cautious on investment despite a slight
improvement in sales. The government is expected to stabilise domestic demand and reduce housing inventory in the coming months.
• In response to the current economic headwinds, the government has introduced a set of policy stimuli in fiscal and financial areas, to support consumption,
investment, real estate, and capital markets since the end of September, aiming to stabilise housing and financial market prices. As policies are gradually taking
effect, it is expected that China’s economy will meet its’ growth target in 2024.

© 2024 KPMG Huazhen LLP, a People's Republic of China partnership, KPMG Advisory (China) Limited, a limited liability company in Chinese Mainland, KPMG, a Macau (SAR) partnership, and KPMG, a Hong Kong (SAR) partnership, are
member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
2
China’s economic recovery momentum slowed down in Q3 2024
Growth rate of major economic indicators, YoY, %

2020-23
2023 Q3 2023 Q4 2024 Q1 2024 Q2 2024 Q3 • China's GDP grew 4.8% year-over-year in the
Average
first three quarters of 2024. GDP grew 4.6% in
GDP 4.8% 4.9% 5.2% 5.3% 4.7% 4.6% Q3, 0.1 percentage points lower than Q2, in
line with market expectations.
Industrial
5.0% 4.2% 5.2% 6.0% 5.9% 5.1%
production • Consumption growth remained subdued. Fixed
asset investment growth dropped to 2.6% in
Retail sales 4.1% 4.2% 8.3% 4.7% 2.6% 2.7% Q3, with activity in the real estate market
remaining weak and infrastructure investment
Fixed asset constrained by fiscal funds shortages.
4.4% 1.9% 2.7% 4.5% 3.6% 2.6%
investment
• As China's domestic demand continued to
weaken, industrial production growth dropped
Exports 9.0% -9.9% -1.2% 1.1% 5.6% 6.0%
to 5.1% in Q3 and industrial capacity
Imports 6.4% -8.5% 0.9% 1.6% 2.5% 2.4% utilisation rate was at a low level in the same
period of history.
Income per
4.8% 6.1% 6.7% 6.2% 4.5% 5.0%
capita • Export growth picked up from 5.6% in Q2 to
6.0% in Q3 due to a lower base and robust
Fiscal revenue 4.6% -0.9% -1.0% -2.3% -3.2% -0.8%
external demand.
Fiscal
3.7% 4.1% 9.2% 2.9% 1.1% 1.9%
expenditures
Source: Wind, KPMG analysis
Note: growth of GDP, industrial production, and income per capita are in real terms, and others are in nominal terms.

© 2024 KPMG Huazhen LLP, a People's Republic of China partnership, KPMG Advisory (China) Limited, a limited liability company in Chinese Mainland, KPMG, a Macau (SAR) partnership, and KPMG, a Hong Kong (SAR) partnership, are
member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
3
Government has introduced a set of policy stimuli since September
Key takeaways from recent policy talks

Ministry of Housing and • In response to economic headwinds, the

Financial institutions Ministry of Finance Urban-Rural Development government has introduced a set of policy
stimuli in fiscal and financial areas to support
Fiscal policy: The central
Monetary policy: Cut RRR by Property: Cash resettlement for consumption, investment, real estate, and
government has relatively large
50bp. Cut policy rate by 20bp 1mn units under urban village capital markets since the end of September.
room for debt expansion and
deficit increases. redevelopment. Eligible projects
need to generate enough future • This round of stimuli is aiming to stabilise
Local debt resolution: Approved a cash return to cover the cost. asset prices, including capital market and
Stock market: Create to purchase
5-year, Rmb10trn local govt. debt
stocks, with an initial quota of property market, and to reduce the debt
swap program.
RMB500bn; Create relending burden of households and local governments.
programme for equity buy-back,
National Development and
Property: The first official As the prospects of enterprises and residents
initial quota of RMB300bn endorsement of using LGSB to buy Reform Commission are rebounding, the government is expected
back housing inventory. to issue additional bonds to stimulate
SOE bank recapitalisation: Special domestic demands.
Investment: Pre-approve RMB 200
Treasury Bonds will be issued to bn of next year’s projects by late-
Property: Lower the minimum recapitalise big banks to facilitate October. Continue to issue ultra • As policies are gradually taking effect, it is
down payment ratio for a second risk digestion. long term special treasury bond. expected that China’s economy will meet its’
home to 15%. Reduce existing Expanding the scope of support for annual growth target.
mortgage rates by around 50bp Consumption: Additional
allowances for students in the local government special bonds
near term.

Source: Government websites, KPMG analysis

© 2024 KPMG Huazhen LLP, a People's Republic of China partnership, KPMG Advisory (China) Limited, a limited liability company in Chinese Mainland, KPMG, a Macau (SAR) partnership, and KPMG, a Hong Kong (SAR) partnership, are
member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
4
Domestic demand and production is rebounding thanks to new policy stimuli
Manufacturing and non-manufacturing PMI

70
• The manufacturing PMI, a leading indicator of
industrial production, returned to the
60 expansionary zone in October 2024 after five
months of contraction. The production index
rose 0.8 to 52.0% and the new orders index
50 went up to 50.0%, highlighting the new set of
policies’ success in propping up domestic
demand and production at the same time.
40
• Meanwhile, non-manufacturing PMI saw a
slight rebound in October. Driven by the
30 National Day holiday, the services PMI index
rose to 50.2%. However, affected by subdued
property investments, the Construction PMI
20 dropped 1.1 percentage points to 50.4%.
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Manufacturing Construction and Services

Source: Wind, KPMG analysis

© 2024 KPMG Huazhen LLP, a People's Republic of China partnership, KPMG Advisory (China) Limited, a limited liability company in Chinese Mainland, KPMG, a Macau (SAR) partnership, and KPMG, a Hong Kong (SAR) partnership, are
member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
5
The gap between service and goods consumption has narrowed
Growth rate of catering sales and goods sales, YoY, %

60
• Last year's high base led to a decline in the
YoY growth rate of service consumption. The
YoY growth gap between catering sales and
goods sales narrowed from 7.9 percentage
30
points at the beginning of the year to 1.4
percentage points in August. In September,
goods sales increased by 3.3% YoY, surpassing
the catering sales growth rate of 3.1% for the
0
first time since 2023.

• In addition, online consumption continued to

thrive as new e-commerce models like
-30 livestream sales developed rapidly, driving a
7.9% YoY growth in online goods sales, which
accounted for 25.7% of total retail sales.

-60
2018 2019 2020 2021 2022 2023 2024

Catering Consumer goods Online consumer goods

Source: Wind, KPMG analysis

© 2024 KPMG Huazhen LLP, a People's Republic of China partnership, KPMG Advisory (China) Limited, a limited liability company in Chinese Mainland, KPMG, a Macau (SAR) partnership, and KPMG, a Hong Kong (SAR) partnership, are
member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
6
Consumption trade-in policies are taking effect
Growth rate of goods sales by category, YoY, %

Communication equipment
Food • The overall growth rate of goods sales rose in
Sports and recreational goods Q3 2024, with structural highlights emerging.
Household appliances New types of consumption, such as digital,
environmentally-friendly, and health-related
Medicine
consumption, have become new trends. The
Office supplies
retail sales of communication equipment and
Beverage sports and recreational goods maintained
Tobacco and alcohol rapid growth.
Groceries
Construction materials • Since the end of July, the government has
Furniture strengthened its financial support for the
Apparels implementation of the trade-in policies of
Gasoline and other energy goods consumer goods, promoting the consumption
of related products such as household
Cosmetics
appliances, office supplies, construction
Automotive
materials, and automobiles.
Jewelry
-10 -5 0 5 10 15 20
2024 Q3 2024 Q2

Source: Wind, KPMG analysis. Goods sales data are for above-size retail enterprises

© 2024 KPMG Huazhen LLP, a People's Republic of China partnership, KPMG Advisory (China) Limited, a limited liability company in Chinese Mainland, KPMG, a Macau (SAR) partnership, and KPMG, a Hong Kong (SAR) partnership, are
member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
7
Slowing corporate profit growth dragged down manufacturing investment
Contributions to manufacturing investment growth by sector, %

Chemical products
• Manufacturing investment growth rate
Computer and communications dropped slightly to 8.8% in Q3 from 9.3% in
General machinery Q2.
Special machinery • The decline in manufacturing investment was
Industries with
Non-ferrous metal melting mainly affected by the poor profits
poor profit
performance of industrial enterprises in Q3.
Metal products performance in Q3
The growth rate of industrial profits dropped
Railway and ship to -3.5% in the first three quarters from 3.5%
in H1 2024.
Automobile
Oil and coal mining • However, driven by the recovery of exports
and the accelerated implementation of
Black metal smelting equipment renewal policies, the
Non-metallic mineral manufacturing investment growth rate
showed resilience, 6.2 percentage points
Electrical equipment higher than the overall growth rate of fixed
asset investment. Manufacturing investment
-1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0
continued to play a key role in driving GDP
growth in Q3 2024.
2024Q3 2024Q2
Source: Wind, KPMG analysis

© 2024 KPMG Huazhen LLP, a People's Republic of China partnership, KPMG Advisory (China) Limited, a limited liability company in Chinese Mainland, KPMG, a Macau (SAR) partnership, and KPMG, a Hong Kong (SAR) partnership, are
member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
8
Both central and local government infrastructure investment sped up in Q3 2024
Contributions to infrastructure investment growth by sector, %

Electricity, heat, gas, Electricity and heat

水利、环境 力、燃气及
和公共设施 水的生产和
电力、热

and water
供应业 • Infrastructure investment growth jumped to
production and Gas 11.9% in Q3 from 7.2% in Q2. The growth rate
supply of electricity, water conservancy, and
Water
warehousing investment increased
Water conservancy, Water conservancy significantly in Q3.
ecological
管理业

protection and Ecological protection • Local governments have sped up the issuance
public facility of government bonds since the July Politburo
Public facility meeting, providing sufficient financial support
Warehousing 2024Q3 for infrastructure projects. Meanwhile, some
交通运输、仓储和邮政业

electrical projects suspended in Q2 due to

2024Q2
Railway extreme weather have restarted in Q3. In
addition, a lower base from the same period
Transportation Air of last year helps to explain the rebound of
infrastructure and infrastructure investment in Q3.
warehousing
Waterway
Pipeline
Road

-3.0 -2.0 -1.0 0.0 1.0 2.0 3.0 4.0 5.0 6.0
Source: Wind, KPMG analysis

© 2024 KPMG Huazhen LLP, a People's Republic of China partnership, KPMG Advisory (China) Limited, a limited liability company in Chinese Mainland, KPMG, a Macau (SAR) partnership, and KPMG, a Hong Kong (SAR) partnership, are
member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
9
Large-scale government bonds issuance increased fiscal expenditure
Growth rate of general fiscal revenues and expenses, YoY, %

25
• General fiscal revenue growth decreased to -
20 7.3% YoY in Q3 from -7.2% in Q2. Specifically,
tax revenue declined by 6.4% and land sales
15 dropped by 34.2% in Q3.
10 • With shrinking revenues, the government has
concurrently sped up the issuance of bonds. In
5
Q3, the issuance of central and local
0 government bonds reached 4.2 trillion yuan,
1.4 trillion yuan higher than the same period
-5 last year.

-10 • Due to the increased bond issuance rate, the

growth of general fiscal expenditures surged
to 3.3% in Q3 from -4.1% in Q2.

General fiscal revenue General fiscal expense

Source: Wind, KPMG analysis

Note: growth rate of 4 quarters during 2020-2024 is calculated in CAGS base.

© 2024 KPMG Huazhen LLP, a People's Republic of China partnership, KPMG Advisory (China) Limited, a limited liability company in Chinese Mainland, KPMG, a Macau (SAR) partnership, and KPMG, a Hong Kong (SAR) partnership, are
member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
10
Real estate investment remained weak
Property starts and new home sales, YoY, three-month moving average, %

60
• Driven by a series of policies in May to
stimulate property demand, the decrease in
40
property sales further slowed down in Q3,
from a 24.3% decline in Q1 to a 11.6% decline
20 in Q3. Furthermore property investment
growth improved slightly, from a 10.5% decline
in Q2 to a 10.1% decline in Q3.
0
• Sales recovered faster than investments in Q3
mostly due to a structural housing sales
-20 change. Existing housing units‘ prices have
increased at a higher rate than the prices of
houses being constructed. In addition, the
-40 modest improvement in sales combined with
high inventory pressure prompted enterprises
to stay cautious about expanding investment.
-60
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Property sales Property starts

Source: Wind, KPMG analysis

© 2024 KPMG Huazhen LLP, a People's Republic of China partnership, KPMG Advisory (China) Limited, a limited liability company in Chinese Mainland, KPMG, a Macau (SAR) partnership, and KPMG, a Hong Kong (SAR) partnership, are
member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
11
Stabilising house prices have become critical to the recovery of domestic demand
Housing price index of new commercial housing and second-hand housing in 70 large and medium-
sized cities, 2013=100

160 • Policies introduced in May have had a limited

effect on housing prices. By the end of
150 September, the price of new houses in 70
cities had dropped by about 9% from the peak
140 in 2021, while the price index of existing
houses had dropped by 15.4%, further
130 decreasing since the end of June.

120 • As housing prices slumps further, households’

wealth shrinks, impeding consumption.
110 Stabilising house prices has thus become
critical for the recovery of domestic demand.
100
• In addition to further trying to stimulate
90 households’ demand, the government is
expected to use LGSB and other fiscal funds to
80 reduce housing inventory in the coming
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 months.

New commercial housing Second hand housing

Source: Wind, KPMG analysis

© 2024 KPMG Huazhen LLP, a People's Republic of China partnership, KPMG Advisory (China) Limited, a limited liability company in Chinese Mainland, KPMG, a Macau (SAR) partnership, and KPMG, a Hong Kong (SAR) partnership, are
member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
12
Inflation is expected to bottom out and pick up modestly
China Consumer Price Index (CPI) and Producer Price Index (PPI), YoY, %

15
• CPI rose by 0.4% YoY in September 2024, 0.2
percentage points lower than that in August,
mainly due to the decline of non-food prices
10 such as gasoline, services, and durable
consumer goods.

• PPI dropped sharply from -0.8% in July to -

5
2.8% in September, reaching its lowest level in
the year. The prices of construction materials,
which are mainly determined by the real
0 estate market, still fell significantly.

• Looking ahead, CPI and PPI are expected to

-5 bottom out and pick up modestly in Q4 2024,
buoyed by the holiday season and the effects
of new policy stimuli.

-10
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

CPI PPI
Source: Wind, KPMG analysis

© 2024 KPMG Huazhen LLP, a People's Republic of China partnership, KPMG Advisory (China) Limited, a limited liability company in Chinese Mainland, KPMG, a Macau (SAR) partnership, and KPMG, a Hong Kong (SAR) partnership, are
member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
13
Government bond issuances continued to support social finance
Growth of total social financing (TSF) by sector, RMB trillion

35
Others • About RMB 15.4 trillion in new bank loans was
30 issued in the first three quarters of 2024, a YoY
decrease of RMB 4.1 trillion. Credit contracted
Off-balance sheet due to low domestic consumption and
25
financing enterprises to invest timid corporate
investment.
20 Stocks
• As the government accelerated the issuance
15 of bonds, net government bond financing
Corporate bonds totaled RMB 3.8 trillion in Q3, a YoY increase
10 of RMB 1.3 trillion, setting a new high for the
same period.
Government bonds
5
• Affected by a slowdown in IPOs, stock
financing of non-financial businesses only
0 Bank loans
increased by RMB 170.5 billion in the first
three quarters, a YoY decrease of RMB 503.9
-5 Total billion.

2022 2023 2024

Q1-Q3 Q1-Q3 Q1-Q3
Source: Wind, KPMG analysis

© 2024 KPMG Huazhen LLP, a People's Republic of China partnership, KPMG Advisory (China) Limited, a limited liability company in Chinese Mainland, KPMG, a Macau (SAR) partnership, and KPMG, a Hong Kong (SAR) partnership, are
member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
14
The government’s monetary policy remained accommodative
Required reserve ratio (RRR) and Loan Prime Rate (LPR), %

6.0 14 • In September, the central bank cut the RRR by

13 0.5 percentage points, providing RMB 1 trillion
5.5 of long-term liquidity to the financial market.
12 The RRR may be further reduced by 0.25-0.5
5.0 percentage points by the end of the year to
11
coordinate with the local government debt
4.5 10 swap programme. The move is expected to
release another RMB 500 billion to 1 trillion of
9 liquidity into the economy.
4.0
8 • By the end of October, the 1-year and 5-year
3.5 LPR experienced a yearly decline of 0.35 and
7
0.6 percentage points, respectively, the largest
3.0 6 reduction since the LPR reform in 2019. As the
US Federal Reserve began to cut interest rates
in September and the pressure on the RMB
exchange rate has eased, further cuts are
expected for policy rates.
1-year LPR Above-5-year LPR Required reserve ratio (right axis)

Source: Wind, KPMG analysis

© 2024 KPMG Huazhen LLP, a People's Republic of China partnership, KPMG Advisory (China) Limited, a limited liability company in Chinese Mainland, KPMG, a Macau (SAR) partnership, and KPMG, a Hong Kong (SAR) partnership, are
member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
15
Trade with emerging markets supported exports resilience
Growth of China’s exports to major trading partners in in the first three quarters of 2024, YoY, %

15
• China's exports to advanced economies
continued to rebound in the first three
10 quarters of 2024, with exports to the United
States and the European Union increasing by
5 2.8% and 0.9% YoY respectively. However,
China's export share to these regions may face
pressure due to intensified trade
0
protectionism in the future.

-5 • China's exports to emerging market

economies showed a remarkable performance.
The exports to the United Arab Emirates and
-10 Saudi Arabia in this year’s first three quarters
increased by 14.5% and 12.5% YoY,
respectively. ASEAN remains a major trading
partner with exports to ASEAN economies
growing 10.2% YoY.

Source: Wind, KPMG analysis

Note: The Golf Cooperation Council economies include the United Arab Emirates, Saudi Arabia, Oman, Kuwait, Qatar, and Bahrain;
The Central Asia economies include Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan.

© 2024 KPMG Huazhen LLP, a People's Republic of China partnership, KPMG Advisory (China) Limited, a limited liability company in Chinese Mainland, KPMG, a Macau (SAR) partnership, and KPMG, a Hong Kong (SAR) partnership, are
member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
16
High-tech products maintained strong export advantages
Contributions to export growth by category in the first three quarters of 2024, percentage points

1.0
• New energy industry and high-tech products
0.8
0.8
‘’New three’’ continued to strengthen. Electric vehicles,
lithium batteries and solar cells accounted for
0.6 0.6 products 4% of exports in the first three quarters, of
0.6
0.5 which electric vehicles contributed 0.2
percentage points to export growth.
0.4
0.2
• Exports of integrated circuits maintained a
0.2 0.2
high momentum and grew by 19.8% YoY in the
0.1
first three quarters, driving export growth by
0.0 0.8 percentage points. The cumulated export
growth rate of high-tech products rose from
-0.1
-0.2 -0.1 3.1% in H1 to 4.2% in Q3.
-0.2

-0.4
• In contrast, exports of agricultural products,
oil and some labor-intensive products slowed
-0.5 down.
-0.6
Integrated Auto Ship Automatic plastic Agricultural Clothing Oil NEV Lithium Solar
circuit data product product battery cell
processing

Source: The General Administration of Customs, KPMG analysis

© 2024 KPMG Huazhen LLP, a People's Republic of China partnership, KPMG Advisory (China) Limited, a limited liability company in Chinese Mainland, KPMG, a Macau (SAR) partnership, and KPMG, a Hong Kong (SAR) partnership, are
member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
17
China is transitioning to net capital exports
China’s foreign direct investment (FDI) and outbound direct investment (ODI), RMB billion

4,500 • FDI into China reached RMB 640.6 billion by

4,000 the end of September 2024, a YoY decline of
30.4%, while newly established foreign-
3,500 invested enterprises increased by 11.4% YoY,
indicating that foreign investors still have
3,000 confidence in China.
2,500 • The composition of FDI continued optimizing,
2,000 with investment in high-tech manufacturing
accounting for 12% of total FDI, 1.5
1,500 percentage points higher than the same
period last year. FDI in sectors such as medical
1,000 equipment, instruments, and services
continued to grow rapidly.
500
• ODI from China reached RMB 884.6 billion in
0
the first three quarters of 2024, a YoY increase
2021-03 2021-12 2022-09 2023-06 2024-03
of 10.6%. China is transitioning from a capital
importing country to a capital exporting
FDI ODI country.

Source: Wind, KPMG analysis

© 2024 KPMG Huazhen LLP, a People's Republic of China partnership, KPMG Advisory (China) Limited, a limited liability company in Chinese Mainland, KPMG, a Macau (SAR) partnership, and KPMG, a Hong Kong (SAR) partnership, are
member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
18
The RMB exchange rate remained stable
USD index and RMB/USD exchange rate

120 7.6
• In September, the US Federal Reserve
7.4 announced an interest rate cut of 50 basis
points, driving the USD index down from 106
7.2
110 to 100 in Q3, leading the RMB to rise by more
7.0 than 3.4% against the USD.

6.8 • The USD index rebounded to 104 in October,

mainly affected by the market's lower
100 6.6 expectation of the Federal Reserve's interest
6.4 rate cut due to a rebound in domestic inflation.

6.2 • Compared with the beginning of the year, the

90 EUR and JPY depreciated sharply while the
6.0 CFETS RMB exchange rate index rose by 1.7%
at the end of October.
5.8
80 5.6 • As China’s domestic demand is recovering, the
2018 2019 2020 2021 2022 2023 2024 RMB exchange rate is expected to remain
stable.
USD index ( March 1973=100 ) RMB/USD exchange rate (right axis)

Source: Wind, KPMG analysis

© 2024 KPMG Huazhen LLP, a People's Republic of China partnership, KPMG Advisory (China) Limited, a limited liability company in Chinese Mainland, KPMG, a Macau (SAR) partnership, and KPMG, a Hong Kong (SAR) partnership, are
member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
19
Hong Kong's economic growth sloweddown
Hong Kong’s real GDP growth rate, YoY, %

10
• Hong Kong SAR’s GDP growth slowed down in
8 Q3 2024, 1.4 percentage points lower from Q2
to 1.8%, mainly due to weak private
6 consumption and slow exports and fixed
capital investment growth.
4
• Looking ahead, with the central banks of
2
major economies cutting interest rates and a
0 set of policy stimuli implemented In Chinese
Mainland and Hong Kong SAR, Hong Kong's
-2 economy is expected to continue to recover in
Q4.
-4
• It is worth noting that the rising trade tensions
-6 and global economic uncertainty may have a
negative impact on Hong Kong's exports.
-8 Chinese Mainland’s support is thus crucial for
protracted economic growth in Hong Kong.
-10
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023

Source: Wind, KPMG analysis

© 2024 KPMG Huazhen LLP, a People's Republic of China partnership, KPMG Advisory (China) Limited, a limited liability company in Chinese Mainland, KPMG, a Macau (SAR) partnership, and KPMG, a Hong Kong (SAR) partnership, are
member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
20
Contact us
Jacky Zou Tracy Yang
Senior Partner Senior Partner
Northern Region and KPMG LLP Eastern & Western Region
+86 (10) 8508 7038 +86 (21) 2212 2466
[email protected] [email protected]

Ivan Li Ivy Cheung

Senior Partner Senior Partner
Southern Region Hong Kong
+86 (755) 2547 1218 +852 2978 8136
[email protected] [email protected]

Michael Jiang Gary Cai

Head of Clients and Markets Head of Macroeconomic Research
KPMG China Institute
+86 (10) 8508 7077 +86 (21) 2212 3687
[email protected] [email protected]

KPMG China Research Center: Yuan Zeng, Yuka Ding, Carrie Zhou

© 2024 KPMG Huazhen LLP, a People's Republic of China partnership, KPMG Advisory (China) Limited, a limited liability company in Chinese Mainland, KPMG, a Macau (SAR) partnership, and KPMG, a
Hong Kong (SAR) partnership, are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by
21
guarantee. All rights reserved.
kpmg.com/cn/socialmedia

For a list of KPMG China offices, please scan the QR code or visit our website: https://home.kpmg/cn/en/home/about/offices.html

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and
timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such
information without appropriate professional advice after a thorough examination of the particular situation.
© 2024 KPMG Huazhen LLP, a People's Republic of China partnership, KPMG Advisory (China) Limited, a limited liability company in Chinese Mainland, KPMG, a Macau (SAR) partnership, and
KPMG, a Hong Kong (SAR) partnership, are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company
limited by guarantee. All rights reserved. Printed in Chinese Mainland.
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation.