China's Economic Trajectory: Navigating Stimulus and Tariffs Amidst Growth Challenges

China's economic growth is projected to decelerate to 4.5% in 2025 according to a Reuters poll, with additional stimulus measures expected to counteract U.S. tariff hikes. Growth issues stem from trade tensions and internal challenges like property declines and high local government debts.

China's economic growth is anticipated to slow to 4.5% in 2025 and further decelerate to 4.2% in 2026. This analysis from a Reuters poll indicates policymakers are poised to introduce new stimulus strategies to counteract the impact of expected U.S. tariff increases.

The GDP grew by an estimated 4.9% in 2024 due to stimulus initiatives and robust exports, narrowly hitting the government's target. However, the looming return of trade tensions, as signalled by U.S. President-elect Donald Trump's upcoming tenure, poses risks. Hefty tariffs on Chinese goods could affect exports and economic activities such as corporate capital expenditure and household consumption.

China's central bank is anticipated to adopt aggressive monetary measures, including potential cuts to key rates and reserve requirements, in an effort to spur growth. Given the economic uncertainties, analysts highlight that China's future stimulative actions may hinge on the timing and scale of U.S. tariff implementations.

(With inputs from agencies.)