China’s economy proved surprisingly resilient in April, against a backdrop of doubts that are still weighing down its growth outlook. The UOB Group reported that the country’s stimulus measures are expected to provide further support in stabilizing the economic outlook. Policymakers are living in fear of the broken property market. Over the last month, leading indicators such as home values, investment in commercial real estate and sales of residential real estate have all begun to cool.
Key economic indicators showed a patchy picture, with both strong and weak performances seen across many industries. Furthermore, CBRE’s forecast of China’s GDP growth in 2025 has been revised upward to 4.6% from a previous estimate of 4.3%. This revision reflects a more optimistic view of the economy’s trajectory, largely influenced by short-term benefits stemming from the recent US-China trade truce. Second quarter 2025 GDP growth will be growing at a rate of 4.9% year-over-year. This comes on the heels of a robust first quarter that realized a 5.4% growth rate. In comparison, their forecast for the second half of 2025 shows growth slowing to 4.2% YOY.
Though these are welcome changes, huge clouds of uncertainty still hang over China’s economic future. For the future trajectory, much depends on the formation of a permanent comprehensive trade deal with U.S. and China. Extremely important will be how future tariff rates are set. Whether looking at manufacturing, agriculture, or services, reciprocal tariffs that went into effect this past April have had a serious negative effect. Consequently, all market participants are moving to a defensive position.
The industrial production (IP) sector has been a standout performer. At the same time, retail sales and the property sector faced some headwinds in April. Concerns over the direction of the economy took a heavy toll on retail sales this month. Consequently, urban fixed asset investment (FAI) came in weaker than expected. Despite all of the above, retail sales and FAI remain accumulating month-over-month momentum. At the same time, the leg survey unemployment rates have dipped slightly.
“Factoring in the near-term boost from the 90-day US-China trade truce, we revise higher our forecast for China’s GDP growth for 2025 to 4.6% from 4.3%, with 2Q25 at 4.9% y/y (1Q25: 5.4%) and 4.2% y/y in 2H25. The uncertainty in China’s outlook remains high and hinges on whether there is a durable trade agreement between US and China as well as the eventual tariff rates. China’s stimulus will lend further support to stabilise its outlook.”
On the ground, Chinese policymakers are doubling down on the property market. It represents real vulnerabilities to our overall economic stability. Home price and residential property sales have fallen in recent months. Further, this decline is concerning as its potential to harm consumer confidence and long-term economic growth.
Ho Woei Chen observed that,
“IP stays robust but retail sales and property market weakens in April.”
The property market continues to be a focal point for policymakers, as it exhibits vulnerabilities that could jeopardize broader economic stability. Indicators such as home prices and residential property sales have softened, raising concerns about the potential long-term effects on consumer confidence and overall economic growth.