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Highlights
- Major banks lift China’s 2025 growth outlook
- Export rebound expected after easing trade tensions
- Policy stimulus may be scaled back, affecting market sentiment
China’s economic outlook for 2025 has been upgraded by several global financial institutions, driven by improving export forecasts and a temporary pause in trade tensions with the United States. This shift in expectations could influence sentiment across global equities, including those within the Australian market, particularly the ASX300 index.
Analysts from Goldman Sachs (NYSE:GS), JPMorgan Chase (NYSE:JPM), ING, and Bloomberg Economics have revised their projections for China’s GDP growth in 2025 to 4.6% or higher, up from previous estimates as low as 4%. This reassessment follows a temporary truce in the ongoing trade dispute between China and the US, which has helped ease concerns over declining exports.
Goldman Sachs highlighted that with the trade environment stabilizing, China is less likely to see an export contraction this year. This improvement reduces the pressure on Chinese policymakers to introduce aggressive fiscal measures or further monetary easing. For example, Goldman Sachs now anticipates only one 10-basis-point policy rate adjustment for the remainder of the year, a shift from its earlier expectation of two such moves.
Meanwhile, JPMorgan Chase has also adjusted its view, scrapping its earlier forecast for a 1 trillion yuan stimulus package—around US$139 billion—that was expected to be discussed at an upcoming Politburo meeting. This signals a more measured approach to economic support from Beijing, reflecting growing confidence in organic economic recovery.
Despite the positive revision, Chinese equity markets have shown mixed reactions. Hong Kong-listed shares experienced a brief dip on Tuesday as initial excitement around the trade détente faded, although the market saw a recovery the following day.
For Australian investors, these developments could ripple through the ASX300 index. In particular, sectors exposed to Chinese trade and commodities may feel the effects of shifting Chinese demand.
Additionally, those interested in consistent income streams might monitor how this changing macroeconomic environment impacts ASX dividend stocks, particularly in industries like mining, energy, and consumer goods, where trade dynamics with China play a pivotal role.
As global trade narratives continue evolving, the interplay between China’s policy direction and international markets remains a critical factor in shaping investor sentiment and performance across key Australian indices.
