Data from the world’s second-largest economy for the first two months of the year beat expectations and real GDP growth is tracking slightly over 5%, Goldman Sachs analysts wrote in a Friday note. This is higher than the firm’s 4.9% forecast.
“The narrative shifted notably in early 2025. Although economic activity remained soft, many indicators appear to have stopped deteriorating,” wrote the analysts at Goldman Sachs.
The analysts’ assessment of China’s economy came just days before April 2, when US President Donald Trump’s administration is planning to impose new reciprocal tariffs.
Goldman Sachs’ analysis showed that despite a 20 percentage-point increase in US tariffs in the past two months, an index for Chinese trader uncertainty hasn’t risen much, “implying that the tariff drag to domestic investment might be smaller than we currently expect.”
Credit growth is also accelerating — a sign of potential growth as businesses and people borrow — and on-the-ground signs from Goldman Sachs’ research teams indicate stability or marginal improvements in several key sectors, including property.
Meanwhile, stock markets have been buoyed by a tech-led rally prompted by the rise of the cost-efficient AI model DeepSeek and Chinese leader Xi Jinping’s meeting with private sector entrepreneurs last month as a sign of endorsement.
To be sure, much of China’s current economic fundamentals have not changed. Industrial activity and investment in manufacturing are still outperforming, while property activity remains depressed. Inflation also remains “too low” and employment remains challenging, wrote the Goldman Sachs analysts.
Source: Africabusinessinsider
