The PHBS Think Tank (北大汇丰智库) has released its latest economic report, offering an in-depth look at China’s macroeconomic performance in the first quarter of 2025. The findings point to a “strong start” for the year with Q1 GDP growth projected at 5.2%, driven by a stabilizing real estate sector, resilient momentum in emerging industries and a large scale of trade surplus. However, weak consumption and investment growth highlight persistent challenges.

Key Trends Shaping Q1 of 2025:

• Real Estate Market Stabilization

  Supportive policies led the real estate market to a recovery trajectory, which boosts market confidence and broader economic sentiment. Policy support has revived property sales, boosting demand for furniture, appliances, and related goods. But oversupply risks loom in the upstream sector, with steel prices already plunging.

• Growth in Auto Exports

  Although domestic retail sales growth for automobiles has turned negative in February 2025, investment and production related to the auto industry continue to grow at a high pace—mainly because new energy vehicles (NEV’s) companies hold optimistic prospects on overseas markets.

• Policy-Driven Growth in Electronics and Transport

  Domestic industrial policies continue to support the investment, production, and retail of electronic and transport equipment, fostering a healthy industrial cycle. Products related to such equipment cover a wide range of emerging industries, including the digital economy, robotics, low-altitude economy, shipbuilding, high-speed rail, smart wearables, mobile phones, computers, and automobiles. These sectors epitomize the direction of China’s industrial transformation and stand as focal areas for industrial policy support.

• Export Surge and Future Challenges

  A recent export rush has benefited labor-intensive and home appliance sectors. However, potential disruptions from U.S. tariff policies may pose challenges in the months ahead—companies are already taking steps to mitigate risk.

Looking Ahead:

• GDP growth for the first half of 2025 is expected to be 5.0%.

• Exports are likely to slow in Q2 due to tariff impacts.

• The real estate market is projected to continue its steady recovery.

• Manufacturers are expected to accelerate automation and intelligent technologies adoption to manage costs.

• The current policy measures may not be sufficient to effectively stimulate consumption.

Policy Recommendations from the PHBS Think Tank:

• Strengthen support for Chinese enterprises venturing overseas in establishing an international vertical specialization system.

• Boost fiscal policy effectiveness to stimulate domestic consumption.

• Secure minimum of ¥700 billion land reserve special bond issuance this year.

• Address tech-driven unemployment via reskilling programs and progressive fiscal and tax reforms.

As the global political and economic landscape continues to shift, the PHBS Think Tank emphasizes the importance of policy precision and long-term structural reform to sustain China’s economic resilience.

For full analysis (in Chinese), access the PHBS Think Tank report here: https://thinktank.phbs.pku.edu.cn/info/1021/2391.htm 

About PHBS Think Tank

The PHBS Think Tank unites research centers at Peking University HSBC Business School to produce data-driven policy solutions. Leveraging interdisciplinary expertise, Think Tank delivers empirical analysis on pressing economic challenges—including macroeconomics, global trade, financial innovation, and Greater Bay Area development.