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PHBS Think Tank Releases Macroeconomic Report for Q1 2025

On April 17, 2025, the PHBS Think Tank of the HSBC Business School at Peking University published its macroeconomic analysis report for the first quarter. The report reveals that 2025 has started strong for China’s economy, with substantial growth in production and a record trade surplus during the initial months of the year. However, the report also notes a deceleration in both consumption and investment growth.

The analysis identifies four major macroeconomic trends observed in the first quarter:

1. Stabilization of the Real Estate Market: Government policies have played a crucial role in stabilizing the real estate sector. Major markets are beginning to show signs of gradual recovery, indicating a positive shifting landscape for property investments and development.

2. Positive Feedback Loop in Automobile Exports: Investments, production, and expectations within the automobile sector have created a synergistic cycle of optimism. The data indicates that leading companies remain hopeful about the impacts of tariffs on new energy vehicles, which bodes well for the future.

3. Support for New Economy Development: The national industrial policies are bolstering investment, production, and retail in sectors such as electronics and transportation equipment. This support is key to sustaining growth in what has been termed the “new economy.”

4. Surge in Exports Amid Tariff Uncertainty: The increase in exports has temporarily spurred production growth in labor-intensive goods and home appliances. Nonetheless, this momentum faces risks from potential future tariff implementations by the United States, prompting many businesses to preemptively mitigate possible disruptions.

Looking ahead to the first half of 2025, the report forecasts GDP growth to reach around 5.0%. However, the pressure from exports is expected to escalate by the second quarter, with current policies likely not robust enough to provide a significant boost to consumption. The real estate sector is anticipated to continue its steady recovery, while manufacturers are expected to increasingly adopt automation and smart technologies to reduce costs.

The report also includes several policy recommendations aimed at enhancing support for companies expanding globally through vertical specialization. It suggests promoting the effectiveness of fiscal policies to stimulate consumption, ensuring that the issuance of special reserve bonds reaches at least 700 billion yuan this year, and accelerating tax reforms to tackle structural unemployment driven by technological changes.

In summary, while the Q1 2025 macroeconomic situation in China demonstrates promise, vigilance is necessary as challenges related to consumption growth and international tariffs loom. The comprehensive insights offered by the PHBS Think Tank serve as a crucial guide for businesses and policymakers navigating these complex economic waters.