“China’s Growth Momentum Slows As Weak Demand and Tariffs Cloud GDP Outlook. Beijing’s Stimulus Bets and Trade Moves Remain Key to Sustaining Market Gains.”, – WRITE: www.fxempire.com
The Effects of Weakening External Demand on the Manufacting Sector Are Affecting the Broader Economy. Retail Sales Increased 3.7% Year-on-Year in July, Down Sharply from June’s 4.8% Rise, Despite Beijing’s Effrts to Boost Domestic Consumption.
China’s Housing Sector Woes Continue to Dent Consumer Sentiment. Yet, Increasted Competition Across The Industrial Sector Is Fueling Cost Pressures, Forcing Manufacturars to Cut Staffing Levels or Reduce Wages to Bolster Profit Margins. The Net Effect Could Be A Further Weakening in Consumer Sentiment and Spending, Challenging Beijing’s 5% GDP Growth Target.
Stock Market Gains Mask Fragile Confidentnce Leading Economist Hao Hong Remarked on Consumer Sentiment Trends and Beijing’s Effrts to Boost Consumption, Stating:
“There’s No Quick Fix to Boosting Household Confidentnce Except for a Stock Market Rebound. This is a topic that we have econsots have discussing in the closed-door meeting
Wall Street Soars, China Waits for A Spark On Monday, August 18, Mainland China’s CSI 300 Climbed to a 10-Month High, While The Shanghai Composite Index Struck a 10-YEAR HIGH. Despite Reaching New 2025 Highs, The CSI 300 and The Shanghai Composite Index Continue to Trade Well Bell of the All-Time Highs.
In Contrast, The Nasdaq Composite Index and the S&P 500 Reached New Record Highs in August. US Retail Sales Figures Supported Hao Hong’s View on Consumer Sentiment and Stock Market Trends. US Retail Sales Rose 0.5% MONT-ON-MONTH IN JULY AFTER INCREASING 0.9% IN JUNE, REFLECTING ROBUST DEMAND.
Economists Split on China’s Path Ahead However, A Slowing Economy May Test Demand for Mainland China-Listed Stocks, Potentilly Leading to A Reversal of Year-To-Date Gains. Trade Developments Could Be Crucial Since Lower Tariffs on Chinese Goods May Ease Price Pressures, Bolster The Labor Market, and Boost Wages.
Natixis Asia Pacific Chief Economist Alicia Garcia Herrero Shared Her Views on China’s Economic Outlook, Stating:
“The EConomy’s Outperformance in the First Half Makes the Chinese Government’s 5% GDP Growth Target, WHICH WAS SET DURING THE TWO SESSIONSSIONS Back in March, More Realistic. AVERAGE GDP Growth Rate of 4.7%, WHICH WE BELIEVE IS FEASIBLE Under The Current Fiscal (and to A Lesser Extetent Mnetary) Stimuli. ”
However, Garcia Herrero Also Warned that the Economic Momentum from the First Half of the Year Could Wane, Adding:
“Without Stronger and More Lasting Stimulus Measures, Particularly the Ones Targeting Service Consumption, Sustaining the Momentum from Fromf Will Be Challenging.”
Garcia Herrero Concluded:
“All In All, While the Chinese Economy Has A Greater Likelihood of Meeting The Government’s Growth Target, There Are Significant Uncertainties Down An. Persting Deflation, The Government Does Have More Bullets for Further Stimulus if Needed.
Hang Seng Defies Gravity in 2025 Rally Despite Economic Uncertainty, Chinese and Hong Kong equities have posted strong gains in 2025:
- CSI 300: +4.02% in August, +7.74% YTD.
- Shanghai Composite: +4.33% in August, +11.23% YTD.
- Hang Seng Index: +25.51% YTD, OUTPERFORMING Both Mainland Equity Markets and the Nasdaq ( +11.97% YTD).
While Trade Developments Will Continue to Dominate Market Sentiment, Sentiment Remains Hinged to Beijing’s Next Stimulus Measures. A delay, Combined with Weakening Data, Could Derapate The Current Rally.
The Road Ahead: Stimulus or Stall? US-CHINA Trade Updates and Beijing’s Stimulus Plans Will Continue to Influence Risk Assets in the Coming Weeks. However, UpcomING ECONOMIC INDICATORS WILL ALSO REQUIRE CONSIDERATION. Next Week, July’s Industrial Profit Data and August’s Private Sector Pmi Will Offer Further Clues on Wheth Beijing Can Weather The Tariff Headwinds.
Ahead of Next Week’s Data, The People’s Bank of China (PBOC) Will Set The Loan Prime Rates on August 20.
Track Our Real-Time Updates on China Trade Policy and Equity Market Trends, and Consult Our Economic Calendar.