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Investing.com -- HSBC upgraded its projections for China’s economic growth, citing a strong start to the year and more resolve from the country’s policymakers.
The bank now anticipates China’s GDP to expand by 4.8% in 2025, up from the previous estimate of 4.5%. The forecast for 2026 has also been revised upward to 4.5% from 4.4%.
The reassessment of China’s growth trajectory by HSBC is underpinned by comprehensive data indicating a solid start to the year, particularly in the January-February period, coupled with strong performance in the fourth quarter of the previous year.
Moreover, the Chinese policymakers have shown “increased resolve to support demand” by keeping the GDP growth target of “around 5%” and ramping up fiscal policy support.
On March 16, Chinese authorities unveiled a detailed 30-point plan aimed at reviving consumption, which has been followed by a series of new measures implemented by various departments and local governments.
“We still expect more policy follow-through, not only on consumption-related measures, but also an emphasis on supporting the private sector and enhancing technology and innovation,” HSBC strategists led by Jing Liu said.
They have raised their forecast for consumption growth this year to 6%, up from a previous estimate of 5%. The strategists also expect retail sales to improve to 5.8%, compared to an earlier projection of 4.8%, citing direct government support and accelerated structural reforms as key drivers.
On the other hand, the presence of external risks and pressures on China’s property sector remain and have recently intensified.
But HSBC believes that the Chinese government could take further steps to stabilize the sector, if needed, both at the local government and the central government level.
Also, the global demand slowdown could pose a challenge for China, the bank notes, with potential tariff risks from the United States and other trade partners, although negotiations “could help to blunt the impact,” the strategists said.