What's going on?

Data out on Monday showed that the Chinese economy staged a mixed recovery last quarter.

What does this mean?

China’s probably not sure whether it should be celebrating or grieving right now. See, the country’s quarterly report partly pleased optimists: the economy grew 3.9% last quarter versus the same time the year before – higher than economists were expecting and a rebound from near-stagnant growth just one quarter earlier. After all, supply chains were freed up as lockdowns in ports became less frequent, which helped industrial production grow 6.3% in September – and greater investment in things like machinery and infrastructure didn’t hurt either. But there was plenty for pessimists too: Covid restrictions hit retail sales, while the teetering global economy dented export growth last month. That’s not to mention the worrying facts that the real estate sector kept shrinking last quarter, and unemployment unexpectedly rose. Despite the positive headline number, then, China’s economy still has issues in spades.

Why should I care?

For markets: Covid’s the captain now.
Covid’s still calling the shots in China, with the country’s response to the pandemic dictating many elements of the Chinese economy. And given that President Xi has secured a third term as head of the ruling Communist Party – while filling key posts with loyal allies – the country’s zero-Covid approach seems unlikely to change anytime soon. No surprise, then, that the CSI 300, a key stock market index, fell 3% on Monday.

The bigger picture: No oil on troubled waters.
China’s the world’s biggest importer of crude oil, so the prospect of ongoing economy-bashing government policies doesn’t bode well for the price of the slippery elixir. Even a surge in oil imports into the country, to the highest level since May, wasn’t enough to balance out the pessimism: Brent crude – a key international oil benchmark – fell 2% on Monday morning when the data hit the press.