Multiple Economic Indicators Outperform Expectations in H1; Global Investment Banks Raise China’s 2025 GDP Forecast

On Tuesday, China’s National Bureau of Statistics released data showing that the country’s gross domestic product (GDP) grew by 5.3% year-on-year in the first half of 2025. Alongside this, several key economic indicators, including consumption, exports, and industrial production, demonstrated strong performance. Following the release of the data, several global investment banks, including UBS, Nomura Securities, and Morgan Stanley, revised their forecasts for China’s 2025 economic growth upward.

These institutions generally cited export resilience and proactive fiscal stimulus as key drivers of China’s economic performance in the first half. Looking ahead, major foreign banks believe that given the drag from potential export weakness, policy support will remain essential in the second half—particularly in stimulating domestic consumption and stabilizing the real estate market.
On July 16, Zhang Ning, Senior China Economist at UBS, raised the firm’s forecast for China’s 2025 GDP growth from 4% to 4.7%. This stable growth was attributed to improved retail performance under the “trade-in” subsidy policy and robust export figures.

Morgan Stanley, in its latest report, revised its 2025 GDP forecast for China from 4.5% to 4.8%. The report emphasized that export strength and front-loaded fiscal stimulus were the primary factors supporting economic growth. It also noted that export performance exceeded expectations due to factors such as accelerated shipments to the U.S., transshipment through ASEAN countries, and the depreciation of the renminbi against non-dollar currencies. Additionally, local governments increased bond issuance in the first half, alleviating liquidity pressures and facilitating the implementation of infrastructure investment and consumer goods trade-in policies.

Lu Ting, Chief China Economist at Nomura, along with his research team, maintained their projections for China's GDP growth in the second half of 2025 and for 2026. However, to reflect stronger-than-expected growth in the second quarter, they made a slight upward revision to the full-year 2025 GDP forecast.

Beyond these three institutions, Goldman Sachs and Barclays have both revised their GDP growth expectations for China to near 5%, while ANZ has raised its projection significantly from 4.2% to 5.1%.

Regarding the economic outlook for the second half of the year, global investment banks generally agree that weakening exports could constrain growth momentum. Any additional policy support will likely be moderate and will depend on the performance of subsequent economic data.

Barclays expects the Chinese government to intensify efforts to boost consumption in the second half, potentially expanding the scope of the trade-in policy to cover a wider range of goods and services.

UBS anticipates that the government may introduce additional stimulus measures in late Q3 or Q4. These could include increasing the fiscal deficit ratio by more than 0.5 percentage points, a 20 to 30 basis point interest rate cut, and further policies to reduce real estate inventory. However, considering external uncertainties and the solid growth recorded in the first half, the scale of these measures may be moderate.

Morgan Stanley noted in its report that economic growth in the second half is expected to decelerate. A weakening export sector, the waning effects of earlier front-loaded exports, and the potential escalation of U.S. tariff policies are seen as primary drags on foreign trade. At the same time, the marginal effect of fiscal stimulus is diminishing, and the boost from trade-in policies on consumption may gradually fade. A stimulus package totaling around RMB 500 billion to RMB 1 trillion may be introduced, with implementation likely in September or October