China Sticks With 2025 GDP Target As Investors Await Stimulus & Economic Releases

Key News

Asian equities were mixed overnight as India and Malaysia outperformed while Pakistan and Mainland China (Shenzhen) underperformed.

It was a relatively quiet night as value outperformed growth in China. Internet stocks were mostly lower except for Meituan, a significant recipient of Southbound Connect buying by Mainland investors.

China’s Politburo meetings have so far resulted in little new stimulus measures to move markets, though we expect more clarity in the coming days and we know that the meetings have been highly economy-focused. However, there are indications of a potential cut to the reserve requirement ratio (RRR), when the time is right.

AI plays were higher overnight after the Politburo indicated more support for the industry. Tourism stocks were also outperformers on talk of increased tax rebates for foreign visitors to China.

Temu, PDD Holdings’ international E-Commerce app, has introduced new levies for US customers to offset tariff impacts. It is reported that, in some cases, the levy is higher than the value of the items purchased. Meanwhile, prices for goods on fast-fashion giant Shein’s platform have more than tripled for US-bound purchases.

Trump’s team said that preliminary details of trade agreements to lower tariffs on 18 countries could begin to be released this week. Meanwhile, Trump said that China will not receive a tariff reprieve until they offer “something substantial” in return. China continues to deny that the two sides have begun negotiations.

China reiterated its continuing faith that it can reach its 2025 GDP target. This implies stimulus to offset the tariff impact. How much exactly and in what form it will come remain to be seen. Bloomberg reported that 2.3% of China’s GDP will be targeted by US tariffs, due to the US export exposure of the economy. Many would be surprised that it will only be 2.3%. This is precisely the number that we have been focusing on and why we believe China is relatively confident in its position going into negotiations.

The People’s Bank of China (PBOC) left the medium-term lending facility rate (MLF) unchanged overnight, which weighed on real estate, while President Xi travelled to Shanghai to meet with bank leaders. This week, starting Tuesday night, we will have economic data points coming out for China from April, including PMIs, which are likely to reflect front-loading of purchase orders ahead of tariffs.

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Last Night’s Performance

Last Night’s Exchange Rates, Prices, & Yields

• CNY per USD 7.29 versus 7.29 Friday
• CNY per EUR 8.29 versus 8.29 Friday
• Yield on 10-Year Government Bond 1.65% versus 1.66% Friday
• Yield on 10-Year China Development Bank Bond 1.69% versus 1.70% Friday
• Copper Price 0.32%
• Steel Price -0.38%