China Will Need to Stimulate Further in Second Half of 2025, Natixis Says

Natixis's chief Asia Pacific economist, Alicia Garcia Herrero, anticipates China will implement additional monetary and fiscal stimulus in the second half of 2025. This expectation comes despite China's economy outperforming expectations in the first half, as further policy intervention is deemed necessary to meet economic targets.

Analysis

According to Natixis's chief Asia Pacific economist, Alicia Garcia Herrero, China is expected to implement additional monetary and fiscal stimulus measures during the second half of 2025. This forecast is particularly noteworthy as it follows a period where the Chinese economy reportedly outperformed expectations in the first six months of the year. The anticipated policy intervention suggests that this initial momentum is not considered sufficient to meet Beijing's full-year economic targets, signaling potential underlying weaknesses or a more challenging outlook for H2. The call for both monetary and fiscal tools implies a comprehensive effort will be required to sustain growth, a key consideration for investors monitoring the health of the world's second-largest economy.

Key Decisions for Investors

• Investors might consider tactical positioning in China-exposed assets, such as Chinese equities and industrial commodities, in anticipation of a potential market uplift from stimulus measures in H2 2025.
• It is crucial to monitor high-frequency economic data out of China closely, as the necessity for further stimulus despite a strong H1 performance signals that underlying economic momentum may be fragile.
• Portfolio managers should watch for specific policy announcements from Beijing, as the nature and scale of the monetary and fiscal support will be key catalysts determining the market's reaction and the sectors most likely to benefit.