China GDP Growth Expected to Slow, Prompting Calls for Additional Stimulus

GDP Growth Expected to Slow

China: China GDP Growth Expected to Slow, in a year during the third quarter of 2025, with GDP growth forecast at 4.8% year-on-year, down from 5.2% in the second quarter and the slowest pace since Q3 2024, according to a Reuters poll of 45 economists. On a quarterly basis, the economy is projected to have expanded 0.8%, slowing from 1.1% in April–June. The slowdown, driven by a prolonged property slump, trade tensions with the U.S., and deflationary pressures, threatens the official growth target of around 5%. Full-year growth is projected at 4.8%, below the target, and is expected to ease further to 4.3% in 2026. Trade tensions have intensified following China’s rare earth export controls and threats of additional U.S. tariffs, impacting exporters who are attempting to diversify into Southeast Asia, Mexico, and the Middle East, though competition and price pressures remain high.

In response, Beijing is expected to implement further stimulus measures to support the economy. The People’s Bank of China is likely to cut its seven-day reverse repo rate by 10 basis points and the loan prime rate (LPR) by a similar amount, while also lowering the weighted average reserve requirement ratio by 20 basis points in Q4. Earlier measures include interest subsidies on household and business loans and deployment of USD 70 billion (500 billion yuan) in policy-based financial tools to accelerate investment projects. Analysts expect additional modest easing steps in November depending on U.S.-China trade talks. China’s consumer price inflation is projected to remain flat in 2025, below the government’s 2% target, before rising 0.9% in 2026. The government is set to release third-quarter GDP data along with September retail sales, industrial production, and investment figures, while leaders discuss the 15th five-year development plan, prioritizing high-tech manufacturing amid escalating U.S. competition.

Source: Reuters