20260115-招银国际-China_Economy_Rebalancing_remains_challenging_8页_808kb

China Economy Summary

Core Content

China's economy in 2025 exhibited resilience in exports, with a growth rate of 5.5%, surpassing initial forecasts. This was driven by a shift in trade relationships toward non-US economies and the reconfiguration of global supply chains to include intermediaries such as Vietnam and Mexico. However, the growth of exports slowed in 2026, expected to decrease to 3.5%, while import growth is anticipated to rebound to 2% in 2026. This divergence between export and import growth widened the trade surplus to a record high of US$1.19trn, or about 6.1% of GDP.

Main Points

• Export Growth and Resilience:

  • Exports to the US fell sharply by 20% due to trade tensions and supply chain decoupling.
  • Exports to the EU, UK, Japan, and Australia grew by 8.4%, 7.8%, 3.5%, and 7.9% respectively.
  • Exports to developing economies, such as ASEAN, Africa, Latin America, and India, showed even stronger growth (13.4%, 25.8%, 7.4%, and 12.8%).
  • High-tech exports like integrated circuits, motor vehicles, and medical equipment grew significantly (26.9%, 21.4%, and 6.0%), while traditional sectors like garments and toys declined.

• Import Trends:

  • Imports showed minimal growth in 2025, with zero growth, exceeding forecasts.
  • Steel product imports dropped by 21.4% due to reduced property development and infrastructure investment.
  • Auto imports declined by 23.5%, as domestic manufacturers gained market share.
  • Rubber imports surged by 29.3%, driven by domestic production and demand.
  • Machine tool imports experienced a strong recovery due to automation and robotization.

• Economic Imbalance and Rebalancing:

  • China faces significant economic imbalances, including high savings rates, weak consumer demand, and deflationary pressures.
  • The US contrasts with China in terms of consumer spending, supply capacity, and inflationary pressures.
  • Economic rebalancing is challenging and requires fundamental structural reforms, which are difficult to implement.
  • In the short term, China may introduce moderate stimulus for property and consumption sectors and anti-involution measures to counter deflation.

Key Information

• GDP Growth:

  • China's GDP growth slowed post-3Q25, dipping below 5% for at least two quarters.
  • Further deceleration is expected in 1Q26, prompting potential policy stimulus.

• Market Implications:

  • If China focuses on aggressive economic rebalancing, it could boost reflation expectations, bond yields, RMB, and stocks, especially in cyclical sectors and consumer goods & services.
  • If the focus remains on technological innovation and fixed asset investment, market reactions would likely be more subdued, with technology stocks continuing to outperform.

• Policy Outlook:

  • The central bank is expected to cut the RRR by 50bps and the LPRs by 10bps.
  • The Ministry of Finance may roll out moderate stimulus for the property and consumption sectors.

Economic Rebalancing Challenges

• China's economic structure is still heavily reliant on exports and fixed investment.
• Consumer savings rates remain high, which constrains domestic consumption.
• The country faces deflationary pressure and overcapacity issues in certain sectors.
• There is a need to shift fiscal support from local governments and enterprises to households and consumers to achieve a more balanced growth model.

Supporting Data

• Figure 1: China's export and import volume growth highlights the uneven performance of different markets.
• Figure 2: China's export and import price growth shows the influence of global commodity prices on the economy.
• Figure 3: Export value growth by country illustrates the shift in trade destinations.
• Figure 4: Imports from China as a percentage of total imports provides insight into the trade dynamics.
• Figure 5: Consumer confidence index by country indicates the strength of domestic demand.
• Figure 6: Manufacturing PMI by country reflects the health of the manufacturing sector.
• Figure 7: Credit growth by country highlights the financial environment.
• Figure 8: Auto sales volume by country underscores the domestic auto industry's growth.
• Figure 9: Home appliance retail sales growth shows the performance of consumer goods.
• Figure 10: Semiconductor sales value by region indicates the global demand for Chinese tech products.
• Figure 31: FX rates provide information on currency movements and trade balance.
• Figure 14: US import price growth by source shows the impact of trade relationships on the US economy.
• Figure 15: China's trade surplus with major partners highlights the trade dynamics.
• Figure 16: Growth of manufacturing investment in China shows the trend in industrial expansion.
• Figure 57: US economic imbalance outlines the contrast with China's economic structure.
• Figure 18: China's economic imbalance illustrates the current economic conditions.
• Figure 19: Export value growth by destination provides a detailed breakdown of export performance.
• Figure 20: Import volume and price growth by product shows the import trends and cost fluctuations.
• Figure 21: Import volume growth by product highlights the diversity and performance of import sectors.

Analyst Certification and Disclosures

• The research analyst certifies that the views expressed in the report reflect personal opinions and not influenced by compensation.
• The analyst confirms no trading or ownership in the covered stocks within a specified period.
• CMBIGM provides ratings such as BUY, HOLD, SELL, and industry outlooks (OUTPERFORM, MARKET-PERFORM, UNDERPERFORM) based on market analysis.
• The report contains important disclosures about risks, assumptions, and potential conflicts of interest, emphasizing the need for independent evaluation and professional advice.

Conclusion

China's economic landscape in 2025 is marked by resilience in exports, a growing trade surplus, and a shift in trade relationships. However, the country continues to face challenges in achieving economic rebalancing due to structural imbalances and the difficulty of implementing fundamental reforms. The upcoming policy measures and market implications will play a crucial role in shaping the future trajectory of the economy, with significant impacts on various sectors and financial instruments.