Goldman Sachs China Matters: Lessons Learned from the Last Year
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Goldman Sachs reviews a year of tracking China's macro data and policy shifts, extracting five key lessons for investors. Official data quality deteriorated in 2025; for instance, the NBS Manufacturing PMI exhibited consistent quarter-end residual seasonality, while fixed-asset investment showed double-digit declines likely caused by statistical corrections rather than actual collapses. Structural divergence within the economy intensified, with exports and industrial production growing over 5%, juxtaposed against a 37% drop in property FAI and an IT sector expanding 11% versus a 1% contraction in construction.
Government-driven technological advancement has yielded significant results, potentially shifting the economy from a phase dominated by real estate drags to one propelled by high-tech innovation. Consequently, property's drag on GDP growth is expected to moderate from 2 percentage points in 2025 to 1.5 in 2026. However, policymakers remain conservative on fiscal stimulus due to rising government debt ratios, an attitude unlikely to shift soon despite its proven effectiveness.
Despite US tariffs, Chinese export volume surged over 8% in 2025. Monthly data reveals tariffs did suppress growth during trade escalations between April and October, but export volumes rebounded significantly in November and December following partial tariff reversals. Looking ahead, the baseline forecast of 5% export volume growth for 2026 faces distinct upside risks if further tariff reductions occur. Investors must comprehensively scrutinize divergent data, as narratives for both bullish and bearish outlooks can easily find supporting evidence.