The economy in China is starting to recover slightly.

The yuan continues to depreciate steadily, even though the People's Bank of China (PBoC) has set a central rate to maintain its devaluation. Nevertheless, China's struggling economy remains a significant factor contributing to the yuan's ongoing depreciation. Additionally, vastly different returns on government bonds in the United States and China have led to the movement of assets to lower-risk and higher-return locations, resulting in decreased investor confidence.

The People's Bank of China (PBoC) has maintained an interest rate at 3.45% for the third consecutive month, indicating increased stability in China's economy. The GDP figures for the third quarter were slightly better than expected, and robust retail sales in China have increased due to a continued low-interest rate environment.

Furthermore, industrial production and employment rates are showing positive signs. However, the ongoing property bubble remains a major concern for investors as new home prices have continuously declined for three consecutive months. This situation, combined with rising household debt and a depreciating yuan, has limited the government's ability to stimulate the real estate sector fully. Nonetheless, the government is still working to address the prolonged property slump.

Foreign Direct Investment (FDI) in China has decreased by 8.4% annually, totaling 9.1997 trillion yuan over the past nine months. Investment in the service sector has decreased by 15.0%, while the manufacturing sector has seen a 2.4% increase. This suggests that foreign investors still consider China as a suitable location for large-scale production and exporting to various countries. Additionally, investments from France, the United Kingdom, Canada, Switzerland, and the Netherlands have increased by 121.7%, 116.9%, 109.2%, 76.9%, and 32.6%, respectively.

The People's Bank of China has injected 8.28 trillion yuan into the economy to stimulate the growing demand and address the prolonged property slump. Additionally, the PBoC has kept the loan interest rate low at 3.45% for one-year prime loans and 4.2% for five-year prime loans, indicating the possibility of further monetary easing if necessary.

The yield on China's 10-year government bonds has increased to 2.75%, aligning with rising global bond yields, as strong U.S. data in the past week has fueled expectations of further Federal Reserve rate hikes. The robust economic data in China provides PBoC with ample room to implement additional monetary easing policies.

Techical analysis data (5H)

Resistance: 7.3123, 7.3153, 7.3209

Support: 7.3038, 7.2981, 7.2952

Source: Investing.com