Chinese economic data may underwhelm this week thanks to the G20 meeting

Photo by Feng Li/Getty Images

The Chinese city of Hangzhou is about to host the G20. It’s a big deal for Chinese policymakers given the attention the meeting will attract, and, as usual, they’ve gone all out to ensure the gathering runs flawlessly.

As they have done prior to other major events and anniversaries, policymakers have ordered heavy industry around the city to cease production in order to achieve beautiful blue skies for the gathering, something that Wei Li, chief China and Asia economist at the Commonwealth Bank, suggests will be felt in the first major Chinese data release for September, China’s purchasing managers’ index (PMI).

He explains:

Beijing has also ordered the suspension of heavy industry production within a radius of 300km around Hangzhou, from 22 August to 6 September. This is to reduce pollution, and hopefully draw less criticisms when the media gather in China during the G20 summit. We expect the suspension to dampen China’s August PMI data. Our forecast for the manufacturing PMI is 49.7 (market consensus: 49.9).

Vanity has its drawbacks, presuming Li is correct.

The PMI report will be released on September 1. The G20 summit runs from September 4-5, with proceedings kicking off on Wednesday with the finance and central bank deputies meeting.

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