China’s economy remained resilient in Apr even as US’ reciprocal and tit-for-tat tariffs kicked in. As with exports, the slowdown in industrial production (IP) was contained as frontloading continued in other markets after US paused its reciprocal tariffs with them, UOB Group’s economist Ho Woei Chen notes.
IP stays robust but retail sales and property market weakens in April
“The uncertainties impacted retail sales and urban fixed assets investment (FAI) which turned out weaker-than-expected in April. Having said that, the m/m momentum has stayed positive for retail sales and FAI while the surveyed jobless rates crept lower. The property market remained a key concern for policy makers as indicators such as home prices, property investment and residential property sales softened in April.”
“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.”
“We reiterate our forecast for an additional 0.1%-point interest rate cut in 4Q25. Our projections for the 7-day reverse repo rate, 1Y LPR and 5Y LPR are at 1.30%, 2.90% and 3.40% respectively at end-4Q25.”