December 4, 2025 10:06 AM GMT China Economics | Asia Pacific What If China's Richest Province Lowers Its GDP Target? Guangdong's GDP growth has been 1.1ppt lower than national avg. per year since 2022. Even if Guangdong cuts its 2026 target to 4%, the national target could remain at 5%, but with policies only to provide a "cushion" to domestic demand, not a "lift". This keeps reflation on a slow burn. What's new? Investors we spoke to are discussing the possibility that Guangdong – one of China's richest pr ...

Summary of Key Points from the Conference Call Industry Overview - **Industry**: Chinese Economy - **Current GDP Growth**: GDP growth slowed to **4.8% YoY** in **25Q3**, the lowest in four quarters, with a cumulative growth of **5.2% YoY** for the first three quarters of 2025 [1][4][6] Core Insights and Arguments - **Growth Target**: The "around 5%" growth target for 2025 remains achievable, with expectations of **4.5% YoY** growth in **25Q4** to meet the annual target [4][6] - **Structural Concerns**: Long-standing structural issues persist, including a **negative GDP deflator** for the **10th consecutive quarter** at **-1.1%**, indicating ongoing deflationary pressures [5][6] - **Supply-Demand Imbalance**: There is a continued imbalance between supply and demand, with net exports contributing **1.2 percentage points** to the **4.8% YoY** growth in **25Q3** [5][6] - **Policy Expectations**: No policy rate cut or RRR cut is expected in **25Q4E**; focus will shift to the implementation of fiscal and quasi-fiscal policies, with a total of **RMB 1.2 trillion** in announced tools [6][8] Economic Indicators - **Industrial Production**: Industrial production grew **6.5% YoY** in September, surpassing expectations, with an average of **5.8% YoY** for **25Q3** [10][12] - **Retail Sales**: Retail sales growth decelerated to **3.0% YoY** in September, the slowest since December, marking the fourth consecutive month of decline [19][21] - **Fixed Asset Investment**: Cumulative fixed asset investment turned negative at **-0.5% YoY** for January-September 2025, the first negative reading since mid-2020 [17][18] Additional Important Insights - **Trade Talks**: Anticipation of new trade talks between US and China, with a belief that the tariff truce could sustain despite fragility [7] - **Fourth Plenary Session**: The Fourth Plenary Session is scheduled for October 20-23, with expectations for a high-level summary of the **15th Five-Year Plan**, focusing on rebalancing development and risk [7] - **Consumer Behavior**: Elevated household savings rate at **38.3%**, with disposable income rising **4.5% YoY** while expenditure increased only **3.9% YoY**, indicating cautious consumer behavior [24] Conclusion - The Chinese economy is facing a complex landscape with slowing growth, structural challenges, and a cautious consumer environment. The focus on fiscal policy implementation and upcoming trade negotiations will be critical in shaping the economic outlook for the remainder of 2025.