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In this CIO Special report, we discuss details of the fiscal package announced by the National People’s Congress’ Standing Committee meeting and provide an update on the macroeconomic performance of the Chinese economy. Domestic demand remains muted and the property sector is expected to gradually stabilise towards the second half of 2025.

The external sector outlook remains uncertain given the impending tariffs by the newly elected Trump administration. The CNY is likely to remain under pressure as the PBoC is likely to allow depreciation of the currency to counter the impact of potential tariffs on exports. Equity market sentiment will likely be driven by a turnaround in macroeconomic data as the implementation of various stimulus measures gradually percolates through the economy

 

Key takeaways:

  • The fiscal stimulus of CNY10tn announced by the National People’s Congress’ (NPC) Standing Committee meeting disappointed markets as it is focused on alleviating the debt burden on local governments but does not provide any direct support to boost consumption.
  • The domestic demand environment is still subdued despite the recent monetary stimulus measures. However, the property sector is expected to gradually stabilise in H2 2025.
  • The CNY will remain under pressure due to USD strengthening and impending tariffs.
  • Equity market sentiment will depend on an improvement in macroeconomic data as the effects of the multiple rounds of stimulus gradually trickle through the various parts of the economy.

 

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The CIO Special below is available to download. Please refer to the Important Information at the end of the memo for disclosures and risk warnings.

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