China's GDP Growth Deceleration and Global Financial Shockwaves
Beijing, Saturday, 12 July 2025.
China’s GDP growth is set to decline to 4.6% in 2025 and 4.2% in 2026 due to trade tensions and deflation, potentially triggering global economic impacts.
Current Trade Tensions and Economic Pressures
China’s anticipated GDP growth slowdown, with projections of 4.6% for 2025 and a further decline to 4.2% in 2026, results largely from ongoing trade tensions with the United States and increased deflationary pressures. As these economic trends continue to unfold, China faces mounting pressure to implement additional stimulus measures to stabilize its economy and counterbalance the adverse effects of these international and domestic challenges [1].
Monetary Policy Adjustments
To navigate the potential economic downturn, financial analysts predict the People’s Bank of China (PBOC) may cut its key policy rate by 10 basis points in the fourth quarter of 2025. Such a move could help mitigate deflationary risks by encouraging borrowing and spending, thereby bolstering economic activity [1][4].
Global Impact and Investor Concerns
China’s economic contraction could have significant ripple effects on global markets as investors react to shifts in Chinese economic policy and performance. Previously, major stock markets in Asia, such as Hong Kong and Tokyo, experienced a downturn following similar economic announcements. If Chinese growth continues to falter, international markets might reassess and recalibrate their economic forecasts, which could lead to decreased global economic stability [5].
Implications for Future Economic Policies
The current economic trajectory places a spotlight on China’s economic planning and policy-making, with domestic demand emerging as a critical factor for sustainable growth. Ongoing strategies emphasize strengthening the domestic market to act as a stabilizer during global economic shifts, while also exploring ways for technological advancement and enhanced productivity to drive future growth [4].