Next Week in China: 14-18 April 2025

 Major Data Releases:

• 15 April: China to report April medium-term lending facility (MLF) interest rate and scale of operations
• 16 April: China to report March industrial production level
• 16 April: China to report March energy production volume
• 16 April: China to report March investments in fixed assets (excluding rural households)
• 16 April: China to report March real estate investments
• 16 April: China to report March total retail sales of consumer goods
• 16 April: China to report March household income and consumption expenditures
• 16 April: China to report March industrial capacity utilization rate
• 16 April: China to report March housing price index

There are 10 key economic reports scheduled for Mainland China in the coming week.

The first few days of April presented significant challenges for China and the global economy with US President Donald Trump’s reciprocal tariffs. In the first two days following his tariff announcements, the benchmark S&P 500 index plunged by 10.5 per cent, losing about USD 5 trillion in market value to post its largest two-day loss since March 2020. On Wednesday, 9 April, Trump announced a three-month pause on the “Liberation Day” tariffs, except for those imposed on China-made goods, which now stand at 125 per cent. The Dow surged by nearly 3,000 points, or 7.87 per cent, immediately after the news. The S&P 500 jumped 9.5 per cent – its best daily gain since October 2008 – while the tech-heavy Nasdaq soared by 12.2 per cent, its strongest daily rise since January 2001.

Focusing on China, data on total retail sales (TRS) are showing promising signs, with the trade-in policy boosting household consumption. We expect TRS growth rate in March to improve to 4.3 per cent, rising from the 4 per cent pace in January and February. Data from the Ministry of Commerce showed that as of 24 March, total applications for car trade-ins nationwide exceeded 1.5 million. Consumers purchased over 28 million units across 12 categories of home appliances via trade-in programs, while more than 45 million buyers applied for subsidies to purchase over 56 million digital products, including mobile phones. Total electric bicycles traded in surpassed 2.2 million. Based on these, fiscal subsidies under the trade-in policy may exceed RMB 40 billion (USD 5.4 billion) in March, potentially boosting the TRS growth rate by more than 2 percentage points. The China Passenger Car Association expects retail sales of compact cars in March to grow by 9.1 per cent year-on-year, a significant improvement from the 1.2 per cent growth in January-February. However, the increase in employee movement after the Spring Festival has softened year-on-year and hotel prices have slightly decreased, indicating that the holiday boost for services such as dining and travel may be waning.

For investment in fixed assets, we anticipate a 3.6 per cent growth for January-March. By sector, infrastructure investment is expected to grow by 5.5 per cent year-on-year, manufacturing investment by 9.3 per cent, while real estate development investment is seen to decline by 9.7 per cent. Notably, with policy support for equipment upgrades through ultra-long-term special government bonds, capital investments may become a key growth driver. Purchases of equipment and tools continued their upward trend, with a year-on-year growth of 18.0 per cent in January to February, up 2.3 percentage points compared to full year 2024, and 13.9 percentage points higher than total investment. More importantly, several major internet technology companies recently released financial reports and updated their future capital expenditure plans. It is expected that leading companies will likely increase their AI investments with the emergence of DeepSeek, further enhancing the elasticity of fixed asset investment in the information transmission, software, and information technology services sectors.

Chinese shares slid week-on-week, reacting largely on tariff pronouncements. As of Thursday, 10 April, the MSCI China Index decreased by 8.91 per cent from the previous week. The Shanghai Composite Index fell by 3.54 per cent, the Shenzhen Component Index by 5.9 per cent, and the ChiNext Index by 7.98 per cent. During this period, large-cap stocks outperformed small-cap and mid-cap stocks. Looking ahead, annual reports and first-quarter earnings forecasts released in early to mid-April may negatively impact risk appetite in the A-share market. Similarly, softer economic data at the margins temporarily reduce risk appetite. The market may enter a risk-off mode in the short term, with a focus on defensive strategies. There is a general expectation that domestic counter-cyclical adjustments will likely intensify in response to sky-high US tariffs. Fiscal policy is expected to take the lead as China’s monetary policy faces exchange rate pressures, making a sizeable interest rate cut unlikely in the short term. However, a reserve requirement ratio cut is anticipated. Once recent market risks are cleared, the market may reach an important mid-cycle low point.

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.