Reuters, Beijing A Reuters poll predicted that China's
economic growth will drop to 4.5% in 2025 and then to 4.2% in 2026, as
policymakers prepare to implement new stimulus plans to lessen the impact of
upcoming tariff increases from the United States.
According to the consensus predictions of 64 economists
surveyed by Reuters, the GDP rose 4.9% in 2024, likely meeting the government's
yearly growth target of about 5% with the aid of stimulus measures and robust
exports.
However, as President-elect Donald Trump, who has suggested
high tariffs on Chinese imports, is scheduled to return to the White House next
week, trade tensions between the United States and the world's second-largest
economy are expected to increase.
"Potential U.S. tariff hikes are the biggest headwind
for China's growth this year, and could affect exports, corporate capex and
household consumption," UBS analysts wrote in a report.
"We (also) foresee property activity continuing to fall
in 2025, though with a smaller drag on growth."
According to the poll, growth accelerated from the third
quarter's 4.6% pace to 5.0% in the fourth quarter compared to a year earlier as
a flurry of support measures started to take effect.
According to the survey, the economy is expected to grow
1.6% in the fourth quarter, compared to 0.9% in the July–September period.
The government is scheduled to disclose December activity
data, fourth-quarter GDP data, and full-year GDP statistics on Friday. GMT
0200.
Due to a prolonged property crisis, poor demand, and
excessive levels of local government debt that have negatively impacted
activity and soured company and consumer confidence, China's economy has failed
to gain momentum since a post-pandemic recovery swiftly sputtered out.
Since September, policymakers have announced a flurry of
stimulus plans, including a 10 trillion yuan ($1.36 trillion) municipal debt
package and reductions in interest rates and banks' reserve required ratios
(RRR). In an effort to boost retail sales, they have also extended a trade-in
program for consumer goods like cars and refrigerators.
More stimulus is anticipated this year, according to
analysts, but the extent and magnitude of China's actions could vary depending
on how swiftly and forcefully Trump imposes tariffs or other punitive measures.
There are more stimuli on the cards.
In order to boost economic development in 2025, Chinese
authorities promised to raise the budget deficit, issue more debt, and relax
monetary policy during an agenda-setting meeting in December.
According to sources cited by Reuters, leaders have decided
to stick to a 5% annual growth objective for this year, supported by a
record-high 4% budget deficit ratio and 3 trillion yuan in special treasury
bonds.
At the annual parliament meeting in March, the
administration is anticipated to present its stimulus programs and growth
targets.
Top executives abandoned their 14-year-old
"prudent" monetary policy position in favor of a "moderately
loose" one in December in response to growing economic risks and
deflationary pressures.
In an attempt to boost the economy, China's central bank is
anticipated to use its most aggressive monetary policies in ten years this
year, although doing so runs the risk of rapidly depleting its arsenal. As
downward pressure drives the yuan currency to 16-month lows, it has already
forced to regularly bolster its defense.
In the first quarter, analysts surveyed by Reuters predicted
that the central bank would lower its key policy rate, the seven-day reverse
repo rate, by 10 basis points. This would result in a corresponding decrease in
the benchmark lending rate, the one-year loan prime rate (LPR).
According to the survey, the PBOC may also reduce banks'
weighted average reserve requirement ratio (RRR) by at least 25 basis points in
the first quarter following two reductions in 2024.
According to the poll, consumer inflation is expected to
increase from 0.2% in 2024 to 0.8% in 2025 and then to 1.4% in 2026.
(See the Reuters global long-term economic outlook polls bundle for additional
stories.)
$1 is equivalent to 7.3308 Chinese yuan renminbi.
(Polling by Anant Chandak and Susobhan Sarkar in Bengaluru
and Jing Wang in Shanghai; Reporting by Kevin Yao; Editing by Kim Coghill)
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