UBS Economics-China Economic Perspectives _China by the Numbers (December ...-119398975

ab22 December 2025Global ResearchChina Economic PerspectivesChina by the Numbers (December 2025) Our guide to Chinese monthly dataWhat the numbers are, what they mean and the outlook going forward.November retail sales cooled, FAI in deep decline, exports picked up China’s property downturn continued in November with deeper YoY contraction of property investment and further MoM decline of housing prices. The YoY contraction in manufacturing (-4.5% YoY) narrowed, while infrastructure FAI continued to experience sharp contraction (-12% YoY), both partly impacted by disruptive factors that may normalize somewhat in 2026. Retail sales growth slowed more than expected to 1.3% YoY. Meanwhile, export growth rebounded unexpectedly to 5.9% YoY. As a result, industrial production (IP) growth moderated only slightly by 0.1 percentage points to 4.8% YoY, with high-tech IP and key "new economy" products continuing to outperform other sectors. See here for our comment. Growth softness may persist in December We anticipate consumption growth will remain weak in December due to the high base effect from trade-in subsidies and the ongoing property downturn in the absence of significant policy stimulus. Infrastructure and manufacturing investment may become less negative YoY, partially supported by new financing tools from policy banks and additional LG bond issuance. Export growth could moderate, impacted by paybacks from prior front-loading and a high base effect. The “new economy” sector should continue to demonstrate robust growth. We continue to expect Q4 GDP growth to decelerate to around 4.2% YoY, with full-year 2025 GDP growth averaging 4.9%, which is broadly in line with the “around 5%” growth target.Modest policy easing is ongoing On the fiscal front, RMB 500 billion from policy banks' special financial tools and an additional RMB 500 billion LGB quota (from the available LG debt ceiling-outstanding gap) should help stabilize economic activity in the coming months, particularly investment. On the monetary side, we continue to expect PBC to cut policy rates by 20bps by the end of 2026, although the latest policy tone appears more balanced and neutral. For the property sector, we anticipate a 30–40 basis point reduction in new mortgage rates in 2026, though possible subsidies on mortgage loans may encounter various policy challenges. With more emphasis on supporting consumption, we still believe early disbursement of the planned consumer subsidies in early 2026 is possible, so as to anchor market expectation and mitigate a high base. CEWC sets a modestly supportive and more balanced policy tone The Central Economic Work Conference (CEWC) set a moderately supportive and more balanced policy stance. We expect China to set its GDP growth target at “4.5–5%” for 2026 at the NPC meeting, while “around 5%” remains a popular projection among market participants. Achieving the latter appears challenging, given the anticipated slowdown in exports and continued prope