China’s GDP forecast cut as Trump trade worries take hold before new term

Though Donald Trump has not yet taken office, his expected tariff increases have led S&P Global Ratings to cut growth projections for China

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US president-elect Donald Trump has proposed high tariffs on Chinese imports, raising global uncertainties over the trade landscape. Photo: AP

Published: 7:00pm, 25 Nov 2024

A top credit rating agency has cut its forecast for China’s economic growth next year and in 2026, saying the renewed threat of higher tariffs under president-elect Donald Trump “blurs” the economic landscape in the Asia-Pacific.

S&P Global Ratings said on Sunday it expected China’s gross domestic product to expand by 4.1 per cent in 2025 and 3.8 per cent in 2026, down by 0.2 and 0.7 percentage points, respectively, from its September projections.

“We expect China’s economy to be hit by the US tariff increases on its exports. Exports will obviously grow much less, and investment too,” said economists at S&P in their first-quarter 2025 Asia-Pacific outlook.

“The impact on investment will in part kick in even before US tariff implementation, because of the increased uncertainty.”

The report, co-authored by S&P’s chief economist for Asia-Pacific Louis Kuijs and senior economist Vishrut Rana, also lowered inflation forecasts for the coming years and projected a weaker yuan, citing expected US tariffs and their associated downward pressure on prices.

Tariff increases’ spillover effects on employment, income and confidence will also weigh on consumption, the economists added.

While Beijing’s stimulus measures have helped shore up growth in recent months, S&P noted that so far there has only been “modest new growth-enhancing fiscal expansion”, with no significant direct support for households and consumption.