The divergence in China’s economy became even more pronounced over the past quarter as consumer demand weakened further while export growth reached new heights and tech keeps booming.
We expect this two-speed economy to continue for the rest of 2026 and into 2027.
China’s housing crisis is a key factor behind the ongoing consumer slump. We see signs of stabilization in home sales and look for home prices to stabilize in 2027.
We have lowered the GDP growth forecast for 2026 from 4.8% to 4.6% on the back of the disappointing consumer data in recent months. We stick to our forecast of 4.7% for 2027.
China’s tech boom pushes the economy into new frontiers. The rising competitive pressure from China for European companies is set to continue. EU and China are on collision course in trade relations.
We look for China to keep a ‘CNY appreciation policy’ over the coming year.
The US and China have agreed on ‘constructive strategic stability’ but bumps in the road are ongoing and a long-term rivalry is here to stay.
The biggest geopolitical risk related to China is a flare-up in tensions over Taiwan. 2028 elections on Taiwan will be a key test.
