Goldman Sachs China: Three Things in China
Summaries are public. PDF access requires an active membership; all members have the same access. Sign in
Goldman Sachs examines three pivotal themes shaping China's market trajectory: commodity demand, policy dynamics, and the pace of economic recovery. Chinese commodity demand showed marginal improvement in the second quarter of 2026, with a 2% sequential increase, though it remained down 1.5% year-over-year and fell short of broader market expectations.
On the policy front, approximately RMB 1.2 trillion in fiscal stimulus measures have been announced, but execution remains slow, with only 30% of funds actually deployed. Goldman anticipates potential additional fiscal spending of RMB 500 billion in the second half of the year and expects the People's Bank of China to cut the reserve requirement ratio by 25 basis points in the third quarter to bolster growth. The Politburo meeting in July is flagged as a critical signal event.
The economic recovery remains uneven. Manufacturing PMI recovered to 50.8 in May, while services PMI reached 51.2. Property investment continued to drag, declining 8% year-over-year, though the contraction narrowed from the first quarter. Conversely, exports surged 12% in May, and new energy investment grew 25%, representing key bright spots. Goldman maintains its 2026 GDP growth forecast at 5.0%, with risks tilted to the downside. Iron ore prices rebounded 15% from lows, while copper remains pressured.