China: A bumpy recovery in the making

Allan von Mehren Danske Bank A/S

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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Allan von Mehren

Danske Bank A/S

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