“Beijing Faces Stimulus Dilemma as Houssing Woes, Youth Joblessness, and Tariff Headwinds Persist.”, – WRITE: www.fxempire.com
“China’s Economic Growth for the Second Quarter Came in at 5.2%, Beating Expectations. It May Be Attributed To Exports Rising by More than 5%, Despite Tariff Pressures. Concern, with Retail Sales Declining, Reflection Continued Caating Among Consumers. ”
Beijing recently focused on stabilizing the labor market to Lift Sentiment and Boost Consumer Spending, Essential for China’s Transition Toward A Consumption-Driven Economy.
However, The Effect of Us Tariffs on China’s Private Sector May Further Erode Consumer Sentiment. June’s Private Sector Pmis Revealed Intensify Price Wars. Weaker External Demand is Intensifying Domestic Competition, Potentally Squuezing Corporate Profits. FIRMS COURCE REDUCE STAFFING Levels to Manage Costs, Impacting Consumer Confidentnce and Spending.
A US-CHINA TRADE DEAL, LOWERING TARIFFS ON ChINESE GOODS, MAY HAVE A MORE SIGNFICANT IMPACT ON SENTIMENT AND DOMESTIC DEMAND. Another Focal Point Wound Likely Be the Real Estate Sector, WHICH CONTINUES TO AFFER CONSUMER CONFIDENCE AND HUSHOLD SPEENDING Trends.
China Housing Market Troubles Resurface Housing Market Data Added to Beijing’s Challenge to Meet The 5% GDP Growth Target for 2025. China’s House Price Index Fell 3.2% Year-on-on-Year in June After Droping 3.5% in May. While the Year-on-Year Trend Signrated An Improving Houshing Market, Other Housing Sector Data Painted A Gloomier Picture.
“China’s New Home Prices Fell 0.3% in June Mom, Marking The Steepest MONTHLY DROP IN 8 MONTHS. Year-Over-Year, New-Home Prices in 70 Cities PlumMeted -3.2 Home Prices Fell 0.6%, The Biggest Drop Since September 2024. Additionally, Residential Sales Fell -12.6% YOY LAST MONT, THE SHARPEST DECLINE THIS YEAR. ”
Falling prices coincides with a Marked Deckline in Real Estate Investment, Another Housing Sector Headwind. The Kobeissi Letter Added:
“Real Estate Investment Droped 1.2% in the First Half of 2025, Recording A New Low Since the 2020 Pandemic. China’s Property Market Crisis is Deapening Again.”
Housing Market, Youth Unemployment, and US Tariffs Call For More Stimulus The Combination of A Potentilly Defeering Housing Market Crisis and High Youth Unemployment Will Likely Be Focal Points in H2 2025. SHRINKING PROFIT Margins from Weakening External Demand May Intensify if More Assean Nations Agree to Punctive US Tariffs on Transhipments.
Vietnam Agreed to a 40% Tariff on Transhipments, Potentilly Impacting Chinese Efforts to Bypass US LEVIES ON EXPORTS Bound for the US. Chinese Exports to Assean Countries Increated from 15% Yoy in May to 17% in June.
Economists Predict A Challenging Second Half of 2025 Garcia Herrero Suggested the NEED FOR FURTHERER STIMULUS FROM BEIJING IN THE SECOND HALF OF THE YEAR, STATING:
“WE’VE BEEN ACTUALLY EXPECTING, FOR QUITE A SHILE, STRONGER STIMULUS FOR The Second Half. {…} We Were Expecting Much Worse Export Data. June Half of the Year is Expert to Be Much WORSE, I THINK STIMUATE FURTHER.
She attributed the First Half of the Year Trends to Front-Loading, The Pause on Liberation Day Tariffs, and China’s Rerouting Effrts to Bypass US Tariffs.
Commenting on Trade in the Second Half of the Year, Garcia Herrero Added:
“Rerouting Will Be Much Harder in the Second Half. So that’s Going to Hit Chinese Exports Indirectly. SO, that’s what’s the Second Half is Tougher and the GOVERNMENT HAS BEEN PREPARING.”
On Stimulus, She Expects More Stimulus, Stating:
“I Think They Going to Annune More on the Monetary and Fiscal Side. The Fiscal Stance in China is at Least Neutral IF Not Positive. It Was Negative Throughout 2024 Iting to be More so that can hit the Target, WHICH is not too good. Been Sustaining the Economy So Far. ”
However, Garcia Herrero Said Not to Expert Stimulus on Household Support, Adding that Consumption Will not be the Primary Growth Driver in 2025.
Hang Seng Index Leads Mainland China Markets on EASING US Tech Export Restrictions Positive Sentiment Toward China’s Q2 GDP Numbers and June’s Exports Bolstered Demand for Mainland China-Listed Stocks. Year-to-Date (YTD), The CSI 300 and Shanghai Composite Index Are Up 1.84% and 4.54%, Respectvely.
Meanwhile, The Hang Seng Index Has Soared 22.64% YTD As EASING RESTRICES ON CHIPS to China Fueled Investor Demand for Electric Vehicle (EV) and Tech Stocks. The Hang Seng Tech Index is up 21.82% ytd. Despite Concerns About China’s Housing Market, The Hang Seng Mainland Properties Index Has Gained 12.14%.
Reports that nvidia (NVDA) and Advanced Micro Devices (AMD) Plan to Resume Chip Exports to China Contributed to the Nasdaq composite index’s ytd gains. The Index Is Up 7.35%, Trailing The Roundhill China Dragons Etf’s 19.18% Rise.