Next Week in China: 7-11 April 2025

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Major Data Releases:

07 April: China to report February trade balance
07 April: China to report February foreign exchange reserves level
07 April: China to report February gold reserves level
10 April: China to report March Consumer Price Index (CPI) and Producer Price Index (PPI) data
10 April: China to report March M0, M1 and M2 money supply growth
10 April: China to report March Total Social Financing (TSF) statistics
10 April: China to report March new renminbi loans

The next two weeks of April 2025 will be significant for major data releases concerning Mainland China.

For the CPI, we expect the March figure to climb from -0.7 per cent month-on-month level to around -0.2 per cent, or -0.5 per cent year-on-year. February inflation was at -0.7 per cent, the second-biggest deflation in 15 years to settle below expectations. Prices dropped by 0.2 per cent month-on-month, weaker than the seasonal pattern. The main reason for the February CPI decline was the Lunar New Year. In March, pork prices began a seasonal decline, and due to the consistently high number of breeding sows, domestic pork supply may remain ample for an extended period and is reflected in lower pork prices. Fruit and vegetable prices also face a seasonal decline, which will likely persist until end-May.

For March, producer prices are expected to stay negative, reaching approximately -2.3 per cent year-on-year and -0.2 per cent month-on-month. The cumulative PPI growth rate for January-February was -2.2 per cent to match December’s figure. The March PPI figure will be challenged by Trump’s new tariff policies. Historically, a decline in export growth often exerts downward pressure on producer prices. The continuous decline in international oil prices since the end of February also significantly impacts the PPI. In 2025, the quotas for government bonds, new special bonds, and ultra-long-term special government bonds have all increased significantly from a year ago. March and April are expected to be periods of intensified fiscal reform and infrastructure investments. Supply-side policies are also likely to be further adjusted in response to shrinking external demand.

In terms of new yuan loans and TSF, we anticipate that new credit in March will be around CNY 3 trillion (USD 412.8 billion), marking a significant seasonal increase of about CNY 2 trillion (USD 275.2 billion) in February. A large-scale bond swap covering outstanding loans held by local government financing vehicles is expected in March, which will directly reduce demand for new long-term corporate loans. However, the increase in infrastructure investments, sustained high growth in manufacturing investments, and accelerated loan disbursement for “whitelist” real estate projects will boost new corporate loans. The real estate market is expected to continue its slight recovery in March. With policy support for long-term consumer and business loans for residents, home loans are likely to see a year-on-year increase.

China stocks were down week-on-week. As of Thursday, 3 April, the MSCI China Index decreased by 2.43 per cent, with the drop largely in reaction to Trump’s effective tariff rate of 54 per cent on China-made products. The Shanghai Composite Index decreased by a softer 0.28 per cent, the Shenzhen Component Index fell by 2.28 per cent, and the ChiNext Index suffered the biggest slide at 2.95 per cent. During this period, small-cap stocks slightly outperformed mid-cap and large-cap stocks. From a style perspective, value stocks outperformed growth stocks. Listed companies will begin releasing their earnings reports in the coming weeks, which may lead to price adjustments in specific sectors even as market risk aversion is increasing. Uncertainties have risen in April and risk appetite has noticeably declined. There is currently a lack of new catalysts to lift market expectations. Therefore, the market may continue to experience short-term fluctuations and consolidation. Going forward, market watchers should look out for the rollout of domestic countercyclical policies, with a structural focus on high-performing sectors.

This piece has been co-produced with Yiyi Capital Limited in Hong Kong, a China specialist and a part of a global financial services group.