Investment Banks Raise China Growth Forecasts After US-China Tariff Truce

Major financial institutions, including Goldman Sachs, JPMorgan, UBS, Morgan Stanley, and ANZ Bank, have raised their growth forecasts for China's economy following a surprise 90-day trade truce between the US and China that significantly reduces tariffs on each other's goods. The agreement cuts US tariffs on Chinese imports from 145% to 30% and Chinese tariffs on US products from 125% to 10%, easing tensions that had previously dampened economic outlooks. JPMorgan now projects China's GDP growth at 4.8% for 2025, up from its earlier estimate of 4.1%, and Goldman Sachs forecasts a 4.6% rise, citing the trade de-escalation as a catalyst for improved economic activity. While some analysts, like those at JPMorgan, caution that domestic demand remains sluggish and that tariff volatility could pose risks, the overall sentiment is optimistic, with expectations of increased exports and a reduced need for additional fiscal stimulus by the Chinese government. Stock market optimism has also been noted, with certain Chinese stocks, such as Zhejiang Dingli Machinery, seeing upgraded ratings due to the tariff relief, although concerns about competition and supply chain risks persist. This renewed confidence reflects a broader consensus that the tariff truce could temporarily boost China's economic resilience and trade performance.