野村：中国下半年展望：不可避免的经济放缓或促使出台更多支持性措施

Investment Rating - The report has revised up the Q2 and 2025 annual GDP growth forecasts to 4.8% y-o-y and 4.5%, respectively, from 3.7% and 4.0% [2] Core Insights - China's economy is expected to experience a steady expansion in the first half of the year, with major activity data growth exceeding that of Q4 last year, driven by exports and consumption [1][3] - A significant slowdown is anticipated in H2, with GDP growth potentially dropping to 4.0% v-o-v due to payback effects from front-loading, a high base, and ongoing issues in the property sector [2][5] - The US-China trade negotiations during the 90-day truce are likely to focus on reciprocal and fentanyl-led tariffs, with the current average US tariff on China estimated at about 42% [4][8] Summary by Sections Economic Outlook - Growth of industrial production, retail sales, and fixed asset investment improved to 6.4%, 4.7%, and 4.0% y-o-y, respectively, in the first four months of 2025 [3] - CPI and PPI inflation were both negative in the first four months of 2025, at -0.1% and -2.4%, respectively [3] Trade and Tariffs - A sharp drop in export growth is expected, from an estimated 6.0% y-o-y in Q2 to -2.0% in Q3 and -8.6% in Q4 [5] - The average US tariffs on China remain high at about 42%, which could inflict material damage on Chinese exporters [5][8] Policy Measures - The People's Bank of China (PBoC) announced a new round of monetary stimulus measures, including RRR and rate cuts, with a forecast for a 50bp RRR cut in Q4 [6][62] - Fiscal spending has accelerated significantly, with total net government bond issuance reaching RMB4,890 billion in the first four months of 2025, a 250% y-o-y increase [69] Consumer Behavior - Retail sales growth is expected to drop sharply in H2, with forecasts of 3.3% y-o-y in Q3 and 2.9% in Q4, down from 4.7% in Q1 [37][46] - The consumer trade-in program has provided a temporary boost to retail sales, but a payback effect is anticipated as momentum fades [36][51] Property Sector - The property sector continues to face challenges, with new home sales declining by -3.2% y-o-y in the first four months of 2025 [52] - The ongoing housing crisis is weighing on the economy, with significant impacts on local government finances due to decreased land sales and property-related tax revenues [54][64]