After all the conjecture over the weekend, the latest batch of Chinese economic data was largely in line with economist forecasts. Economic growth eased to a 7.5 per cent annual pace. But the quarterly growth number improved mildly from 1.6 to 1.7 per cent in the June quarter.

The good news is that retail sales lifted for the fifth consecutive month, and while not at the heady 15 per cent plus growth rates seen a year ago, it still provides a degree of encouragement. Industrial production and fixed asset investment were mildly weaker than forecasts.

While the Chinese growth story has been slowing over the past year, the economic expansion still remains healthy, and more importantly, looks sustainable. Chinese policymakers have been attempting to address the structural imbalances in the economy while maintaining a healthy growth platform. The shift from an export-orientated nation to one driven by domestic consumption will present teething issues, however authorities are in a good position to continue to massage the economy in the right direction.

The key is that while the rest of the world would like China to grow at 10 per cent, policymakers are happy for growth to maintain between 7-7.5 per cent over the coming year. Addressing structural issues and not creating asset bubbles in sectors like property are more important outcomes. The good news is that the latest readings don’t suggest that a hard landing is on the cards. And indeed if more stimulus is required, the central bank is well placed to wade in with additional liquidity, with inflation well contained.

The Reserve Bank will keep a close eye on Chinese activity given its importance to Australia’s growth profile. The latest results are unlikely to alter the easing bias. CommSec expects rates to be cut again in August.

The Chinese economy grew at a 7.5 per cent annual pace in the June quarter, in line with forecasts but down from 7.7 per cent in the March quarter. The economy grew by 1.7 per cent in the June quarter, up from 1.6 per cent in the March quarter.

Retail trade rose at a 13.3 per cent annual rate in June, above the forecast average (+12.9 per cent) and up on the 12.9 per cent annual rate in May.

Industrial production rose at an 8.9 per cent annual rate in June, below the forecast average (+9.1 per cent) and down on the 9.2 per cent annual rate in June.

Urban investment rose at a 20.1 per cent annual rate in the first six months of 2013, below the forecast average (+20.2 per cent) and down from 20.4 per cent in January-May.

China’s National Bureau of Statistics releases its monthly economic statistics around mid-month. Quarterly GDP data is released around the 16th of January, April, July and October. China’s Customs Office releases trade data, and the People’s Bank of China releases financial statistics, around the 10th of each month. China is Australia’s largest trading partner and changes in the Chinese economic have major implications for the Aussie economy.

Overall the Chinese economy is continuing to record firm growth; activity is skewed to consumer spending as desired. Over the past year the recession-like conditions in the euro zone has had a curtailing impact on Chinese exports. And policymakers have been looking at avenues to shift exports to stronger growth regions, while also supporting domestic consumption. The latest healthy retail data was encouraging but it is likely that Chinese activity will remain under pressure over the rest of this year.

In fact Chinese authorities can maintain monetary settings or possibly add further stimulus. Certainly the latest inflation data doesn’t act as a barrier to providing additional stimulus. Keep an eye out for the release of the Chinese Governments urbanisation policy, which may have ramification for Aussie miners.

The Reserve Bank is likely to maintain an easing bias. Downside global risks and lack of domestic activity will ensure rates remain low for an extended period.

What are the implications?

Overall the Chinese economy is continuing to record firm growth; activity is skewed to consumer spending as desired. Over the past year the recession-like conditions in the euro zone has had a curtailing impact on Chinese exports. And policymakers have been looking at avenues to shift exports to stronger growth regions, while also supporting domestic consumption. The latest healthy retail data was encouraging but it is likely that Chinese activity will remain under pressure over the rest of this year.

In fact Chinese authorities can maintain monetary settings or possibly add further stimulus. Certainly the latest inflation data doesn’t act as a barrier to providing additional stimulus. Keep an eye out for the release of the Chinese Governments urbanisation policy, which may have ramification for Aussie miners.

The Reserve Bank is likely to maintain an easing bias. Downside global risks and lack of domestic activity will ensure rates remain low for an extended period.