With only a month left until the end of the quarter, there are tell-tale signs that China is set to log a subdued April-June performance. But it's not mainland data that economists are looking at; the tea leaves lie instead in the teapots of Beijing's Asian neighbors.
Amid the high amount of skepticism surrounding the accuracy of Chinese data, a look at recent economic indicators of Japan, South Korea and Taiwan, some of China's biggest trading partners in the region, could be more fruitful, noted Julian Evans-Pritchard, China economist at Capital Economics.
"South Korean exports, in particular, are a good proxy for how China is performing given the high amount of intermediate goods that Seoul exports to Beijing," Evans-Pritchard said.
China buys around one-fourth of South Korea's exports and data on Wednesday revealed South Korea's total May exports contracted 6 percent on-year, marking nearly one year of straight declines and a major miss on the 1.6 percent expansion Reuters had anticipated. Exports to the world's second-largest economy meanwhile fell 9.1 percent on year, down for the 11th consecutive month.
This indicates Chinese import demand is weakening on the back of tepid appetite from mainland consumers and enterprises, Evans-Pritchard said.