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Reuters
19-05-2025
- Business
- Reuters
Investment banks raise China's GDP forecast after tariff pause
May 19 (Reuters) - Global investment banks are raising their forecasts for China's economic growth this year, after Beijing and Washington agreed to a 90-day pause on tariffs, despite uncertainty around Sino-U.S. trade negotiations. The deal reached between the U.S. and China after bilateral talks in Geneva last weekend surpassed market expectations, as both sides agreed to significantly roll back most of the tariffs imposed on each other's goods since early April. The latest upgrade represents the third major revision by some banks in the past few months, largely due to rapidly evolving U.S. trade policy under President Donald Trump and its impact on the world's second-largest economy. In mid-April, seven investment banks had downgraded their gross domestic product (GDP) forecasts for China to an average of about 4% this year, compared to their previous predictions of 4.5%. China's official target for full-year GDP is around 5.0%. Here is a summary of some forecasts for China's GDP: KEY QUOTES: "With trade tensions defused and domestic economy holding up well so far, we believe potential stimulus could be put on hold now. "We no longer expect any revision to the fiscal budget or government bond quota approved by the National People's Congress (NPC) for this year. If more support is warranted later, it is likely to come from policy banks or other quasi-fiscal tools, considering the PSL (pledged supplementary lending) rate was just cut." "Lingering uncertainties may continue to weigh on corporate confidence, delay domestic capex plans, and lead to further supply chain shift outside of China. "Front-loading of export shipments to the U.S. may continue in the 90-day pause period, which may push up China's export growth in the near term but lead to a negative payback later this year." "With the resumption of U.S.-China trade talks, the left-tail risk of miscalculation between the U.S. and China could be more contained vs. before, in our view. "However, given still-elevated uncertainties around U.S.-China relations, the private sector sentiment may remain fragile, and macro data could be volatile in coming months." "Beyond the 90-day period, it is too early to tell whether the truce will continue, and what the tariff rates will be. We also have doubts about the expansion in consumption despite Beijing's policy easing measures. "Also, it is still unclear how the high-level plans on boosting household spending and income and supporting the service sector are being implemented at the local level. We therefore expect growth in H2 will be under pressure." "Probable export frontloading during the 90-day U.S.-China tariff truce suggests we may not see sizeable weakening in overall economic momentum until mid-3Q. Therefore, Beijing will likely continue to withhold any significant increase in stimulus in the short term. "There is a constant choice between maintaining economic stability and preserving policy room for worse outcomes, as the prospects of U.S.-China negotiations remain uncertain. "In terms of monetary policy, we are scaling back our easing calls to a 20-basis-point (bp) policy rate cut and a 50 bps reserve requirement ratio (RRR) cut by year-end, down from 40 bps and 100 bps previously." "The substantial tariff reduction will support a resumption of trade flows between the U.S. and China, although its impact should not be overstated, as the remaining 30% tariff could still depress exports of certain products, especially with the U.S. economy slowing. "The resumption of U.S.-bound shipments will naturally reduce the need to re-route shipments. Front-loading will be inevitably followed by a significant payback effect after the 90-day pause ends on 12 August. "We still believe it will be quite challenging for Beijing to achieve its 'around 5%' growth target unless it rolls out a sizable stimulus package. Considering the respite on the trade war, Beijing might be under less pressure to introduce the necessary stimulus and reforms."
Times of Oman
12-05-2025
- Business
- Times of Oman
Shura Council receives Chinese official
Muscat — Tahir Mabkhout Al Junaibi, Deputy Chairman of the Shura Council, received at the Council's headquarters today Xiao Jie, Vice Chairman of the Standing Committee of the National People's Congress of China, and his accompanying delegation. The visit comes within the context of cooperation between the two nations and aims to enhance joint efforts. The Deputy Chairman praised the advanced relations between Oman and China, stressing the importance of further strengthening and expanding these ties to serve the mutual interests of both nations across various fields. Discussions emphasized the need to broaden practical cooperation in investment, energy, trade, and cultural exchange, as well as to enhance legislative collaboration between the two councils. The meeting also addressed the latest regional and international developments of mutual interest. On his turn, the Chinese official expressed his appreciation for the growing Omani-Chinese relations on all levels, affirming that both nations have made significant progress in strengthening their friendship. The meeting was attended by several Shura Council members and the Chinese Ambassador to Oman.
Yahoo
05-03-2025
- Business
- Yahoo
The Biggest Takeaway of China's 2025 NPC
Chinese President Xi Jinping reads during a speech by Premier Li Qiang at the opening session of the National Peoples Congress, or NPC, at the Great Hall of the People in Beijing on March 5, 2025. Credit - Kevin Frayer—Getty Images On Jan. 1, Quishi, the official ideological journal of the Chinese Communist Party (CCP), published a speech by President Xi Jinping. In it, China's strongest leader since Mao Zedong called for a period of protracted 'struggle' to maintain political security, achieve self-reliance, and demonstrate the superiority of 'Chinese-style' modernization over that touted in the West. 'History has repeatedly proven that striving for security through struggle brings genuine security,' Xi said, 'while seeking security through weakness and concession ultimately leads to insecurity.' It sounded like a rallying cry in response to recent challenges, including record youth unemployment, deflationary pressures, stock market crash, burst housing bubble, and spiraling debt—not to mention the return to the White House of Donald Trump, who has made good on his election promise of the world's top economy hiking tariffs on the world's top exporting nation. However, Xi's speech had actually been delivered at a CCP study session way back in February 2023. By finally publishing it in the party's flagship journal, the inference is that none of the intervening turmoil has made China's leadership alter course one iota. 'The last 23 months have been terrible for China's economy, terrible for households,' Jacob Gunter, a lead economy analyst at the Berlin-based Mercator Institute for China Studies, told a media briefing in late February. The fact that this speech was just published, adds Gunter, 'says a lot that this is the path, and we should not expect deviation from it.' Which is another way of saying don't expect any big splashes as China's National People's Congress (NPC)—its annual rubberstamp parliament—kicks off on Wednesday. In opening the week-long meeting, Chinese Premier Li Qiang issued his annual Work Report, or fiscal health check, which repeated 2024's growth target of 'around 5%' for the coming year and revealed military spending will rise by 7.2%, which is also roughly the same. 'Achieving this year's targets will not be easy, and we must make arduous efforts to meet them,' Li cautioned an audience of 3,000 cadres crammed into Beijing's cavernous Great Hall of the People. Of course, that nothing much will change was largely self-evident by the fact that this NPC follows on the heels of last July's third CCP plenum, where long-term goals were laid out: bolstering party-state capitalism, countering U.S. containment, boosting innovation, and entrenching loyalty to Xi. As the NPC is a state organ and thus downstream from the apex CCP, drastic course corrections ultimately fall outside its remit. Still, the NPC's intransigence does underscore Beijing's ability to disregard short-term tribulations in favor of long-term goals. Even if, adds Gunter, 'continuity considering the economic downturn and the internal and external struggles that China is dealing with is actually quite remarkable.' But while policy bombshells are unlikely to drop at the NPC, the flurry of speeches and reports will flesh out what we already know: Boosting consumption and expanding domestic demand are top of Beijing's policy agenda, as well as stabilising the beleaguered property market, attracting foreign investment, and promoting supply chain self-sufficiency. As for U.S. tariffs, China today enjoys the benefit of experience from Trump's first term and is taking a more sanguine approach. On Tuesday, Trump added an additional 10% tariff on all Chinese imports on top of the initial 10% he imposed Feb. 4. In response, Beijing announced 15% tariffs on imports of American chicken, wheat, corn and cotton, as well as 10% on sorghum, soybeans, pork, beef, aquatic products, fruits, vegetables, and dairy products. Read More: American Farmers Fear More Pain From Trump's Trade War 'The response from Beijing so far has been to go tit-for-tat but not really make a big issue out of it, probably with the expectation that getting into a big spat would exacerbate matters,' says Chong Ja Ian, an expert on Chinese politics and professor at the National University of Singapore. How long that composure can continue is a big question. In Trump's speech before a joint session of Congress that began just minutes after Li's Work Report, the U.S. President doubled down on threats he would impose reciprocal tariffs on every nation from April 2. 'We've been ripped off for decades by nearly every country on earth, and that will not be allowed any longer,' he said. As such, Xi's longstanding commitment to self-reliance is looking increasingly prescient. On Feb. 17, he welcomed some of the biggest names in China's technology sector for a highly choreographed meeting, where he urged them to 'show their talent' and contribute to China's growth. It marked an about-turn from Beijing's heavy-handed regulatory crackdown four years ago and reflects the CCP leadership's concern about a slowdown in growth amid American efforts to stymie China's access to transformative technology. The meeting showed 'a recognition that the economy was not doing well,' says Steve Tsang, a professor at the University of London and director of its SOAS China Institute, 'and some high-profile gesture needs to be taken to show Xi is serious about getting the economy back on track.' Indeed, efforts to achieve self-sufficiency—previously enshrined in controversial policies like Made in China 2025—appear to be paying dividends given recent headline-grabbing tech breakthroughs, such as drastically improved yield for Huawei's latest semiconductor chips and the buzz around China's generative AI platform DeepSeek, both of which contributed to a stock rally that added rally $4 trillion to markets in China and Hong Kong. However, sustaining this bull market and improving China's economic prospects more broadly ultimately depend on boosting domestic consumption, which continues to lag. The issue, writes economist Michael Pettis, a nonresident senior fellow at Carnegie China, is whether weak spending is down simply to consumer confidence or engrained structural problems. 'While low confidence is certainly among the causes of China's economic malaise, much, if not most, of the causality may be structural,' he writes. Li's Work Report talked a good game on attracting foreign investment, boosting food security, unleashing the creativity of 'future industries,' and plowing $100 billion into new infrastructure projects. Additionally, China will issue 1.3 trillion rmb ($180 billion) in ultra-long special treasury bonds, as well as 4.4 trillion yuan ($600 billion) in local government special-purpose bonds to offset the negative effects of falling tax revenues and depressed land sales. But analysts doubt these measures directly nor adequately address the underlying reasons for lackluster consumption: public anxiety about future earnings amid a torpid economy and the falling values of real estate, which forms the principal store of household wealth. 'While they did deliver some increase in fiscal support, the degree of easing is more modest than it might appear,' writes Julian Evans-Pritchard, Head of China economics at Capital Economics, in a briefing note. 'We remain skeptical that it will be sufficient to prevent growth from slowing this year.' As such, Xi's embrace of 'struggle' without adequate examination of hardship's cause may portend more pain ahead. Write to Charlie Campbell at
