China: A bumpy recovery in the making
|Chinese policy makers have drawn a line in the sand and now push stronger for an end to the housing crisis. We expect the stimulus push to continue in 2025 to achieve this.
However, a new US-China trade war is looming expected to cause a new bump in the road. We have revised down growth to 4.7% from 5.2% in 2025.
We expect the CNY to weaken further against the USD, which will dampen some of the impact from higher tariffs.
In 2026 we look for growth at 4.8% but with a healthier composition with the consumer engine moving up a notch and the drag from housing easing further.
The US-China rivalry is set to intensify with Trump’s foreign policy taking stronger aim at China. He is unlikely to cross China’s red line on Taiwan, though.
EU-China trade tensions are likely to continue but we don’t expect it to escalate into a big trade war.
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