FICC Research Economics 13 June 2025 China Outlook Trade truce continues Ongoing trade talks could reduce the tail risks of trade war escalation. We expect exports to slow visibly to close to 0% in H2 based on a likely payback from ~6% growth in H1. We expect 2025 full-year CPI inflation to stay at the post-GFC low of 0.2%. Next week, retail sales & FAI will be in focus. Despite absence of details, the ongoing trade talks could reduce tail risks Following the phone call between Trump and Xi last week, the U ...

(*seasonally adjusted by GS) Main points: 1. China's headline CPI inflation was unchanged at -0.1% yoy in May, as the decline in goods prices was offset by higher services prices (Exhibit 1). In month-on-month terms, headline CPI fell to +0.5% (annualized, seasonally adjusted) in May (vs. +0.8% mom s.a. ann in April). 2. In year-over-year terms, food inflation edged down to -0.4% yoy in May from -0.2% yoy in April. This is primarily due to lower prices of fresh vegetables (Exhibit 2). Among major food items ...