China data dump to offer health check on key economy

The Chinese economy is getting squeezed by bad debt.
Kevin Frayer | Getty Images
The Chinese economy is getting squeezed by bad debt.

Markets will eye China's data dump this week in the hope of gleaning insight into the health of the world's second-largest economy, and what it means for the rest of the world.

On Sunday, China reported a 1.8 percent on-year drop in exports to $172.7 billion for April, after an 11.5 percent surge in March. Imports dropped 10.9 percent to $127.2 billion on-year, on top of a 13.8 percent fall in March.

On Tuesday, Beijing will release April consumer price and producer price indexes (CPI and PPI).

"CPI inflation is likely to remain around 2.3 percent year-on-year, [while] producer price deflation is likely to continue to abate," Shane Oliver, head of investment strategy and chief economist at AMP Capital, said in a weekly note.

China's April monetary aggregates are also due on Tuesday. Then on Saturday China will release March fixed asset investment, April industrial production and April retail sales.

"Chinese economic activity indicators due May 14 will be watched closely to see if the improvement in momentum seen in March has continued into April," Oliver said.

Reuters reported that China's health could have a knock-on impact on the U.S. Federal Reserve's rate hike path.

Economic activity increased in the first quarter because of record bank lending, the newswire reported, adding that worries about a commodity bubble and fast-rising home prices, as well as spreading debt defaults and bad loans, led regulators to tap the brakes on expectations of further aggressive stimulus.

Any evidence of a further slowdown in China could dissuade the U.S. Fed from tightening policy as expected in June. The central bank left interest rates unchanged at its April meeting, saying it was closely monitoring both domestic inflation and global economic and financial developments.

Meanwhile, South Korea's central bank is set to announce its monetary policy decision on Friday.

Despite poor domestic demand and weak external export growth, Moody's Analytics expect South Korea to keep interest rates on hold at 1.5 percent because "the high level of private debt is a concern for the BoK."

Other key data due this week includes Japan's April consumer confidence on Monday and Australia's March housing finance data on Wednesday.

Also on tap this week:

Monday, 9 May:

Taiwan April Foreign trade

Wednesday, 11 May:

Philippines March industrial production
South Korea April employment
Thailand central bank monetary policy meeting
OECD March Composite leading indicators

Thursday, 12 May:

Malaysia March industrial production
India March industrial production
Philippines central bank monetary policy meeting

Friday, 13 May:

New Zealand Q1 Retail trade
Malaysia Q1 GDP
Hong Kong Q1 GDP
Japan March Industry activity indexes

- Reuters contributed to this report

Follow CNBC International on Twitter and Facebook.