All the Credit China: Projections for 2025
Jan 17, 2025
Shikeb Farooqui, Lead Asia Economist at PGIM Fixed Income, shares insights into China's economic outlook for 2025. He discusses potential growth challenges, including the impact of tariffs and a volatile property market. Farooqui highlights a 65% chance of achieving a soft landing despite rising social unrest and staggering youth unemployment nearing 50%. The conversation delves into geopolitical tensions with the U.S. and Taiwan, and the Chinese government's measures to restore confidence in the economy.
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China's Economic Challenges
- China faces demand, financial, and fiscal imbalances requiring structural reform.
- They must boost private sector confidence and heal the property sector to avoid a deflationary trap.
China's Growth Projection
- Shikeb Farooqui predicts China's 2025 growth around 4.2%, signaling a soft landing.
- This contrasts with China's official 5% target, reflecting economic headwinds.
Soft Landing Scenario
- Shikeb Farooqui assigns a 65% probability to a "soft landing" scenario for China.
- This assumes continued US "de-risking plus" and calibrated Chinese stimulus.