#China #Shenzhen #Peking University #PHBS Think Tank #Macroeconomic Report

Overview of Q1 2025 Macroeconomic Report

The PHBS Think Tank at Peking University HSBC Business School has released its Macroeconomic Analysis Report for the first quarter of 2025, showcasing promising developments in the Chinese economy. According to the data, January and February witnessed production levels surpassing expectations, culminating in a record trade surplus for this time period. Nonetheless, the report indicates that consumption levels and capital investment have increased at a more modest rate.

Key Trends in the Report

The report outlines four pivotal macroeconomic trends:

1. Stabilization of the Real Estate Market:
The real estate industry has demonstrated signs of stabilization, credited largely to government policy interventions. Notably, major markets are beginning to show a gradual recovery, which could signal better performance in the sector moving forward.

2. Positive Developments in Auto Exports:
The automobile export sector has experienced a beneficial cycle where investment, production, and market expectations reinforce each other. With recent data suggesting a positive outlook, leading automobile companies are optimistic regarding the influence of tariffs on new energy vehicles, indicating a strong growth trajectory in this field.

3. Advancements in New Economy Sectors:
The report highlights the role of domestic industrial policies in facilitating investment, production, and retail activities, particularly in industries such as electronics and transportation equipment. These supportive measures are crucial in sustaining a growth cycle within the new economy.

4. Export Surge Amid Tariff Concerns:
A noteworthy increase in exports has been observed, particularly in labor-intensive goods and home appliances. However, exports face potential risks associated with forthcoming tariffs from the U.S. Many enterprises have begun adopting strategies to avert disruptions anticipated from these changes.

Economic Outlook for 2025

As we look ahead to the first half of 2025, projections suggest that GDP growth will reach around 5.0%. However, concerns about export pressures are likely to escalate in the second quarter. Current policy measures may fall short in effectively enhancing consumption rates. A continuation of steady recovery within the real estate market is expected, while manufacturers are poised to increase the integration of automation and smart technologies in their operations to remain competitive.

Policy Recommendations

To further ensure economic resilience, the report advocates for a series of policy recommendations:

• - Strengthen support initiatives for enterprises aiming to expand globally through vertical specialization.
• - Optimize the impact of fiscal policies to bolster consumption effectively.
• - Guarantee that the issuance of special bonds for land reserves this year reaches a minimum of 700 billion yuan.
• - Accelerate reforms in fiscal policies and taxation to address the structural unemployment resulting from technological advancements.

In conclusion, while the initial phases of 2025 show signs of economic promise, proactive measures and strategic policy recommendations will be essential in overcoming upcoming challenges and fostering sustained growth.