DBS Sees China Economic Growth Rebounding in Q1 2025

DBS forecasts a recovery in China economic growth for Q1 2025, supported by policy support and stronger domestic demand. The report cites a PMI return to expansion in February 2025, the first back-to-back monthly gains since mid-2024, and industrial production rising 6.2% y/y in January. Retail sales also show resilience with 5.8% growth during the Lunar New Year period. Fixed-asset investment remains stable at 4.5% y/y to date, while services expand 7.1% led by transport, hospitality and information technology. Policy easing adds fuel: the PBOC cut the reserve requirement ratio by 25 bps in Dec 2024, fiscal funds begin disbursing for tech and green energy, and local governments accelerate special bond issuance, with 1.2 trillion yuan targeted for Q1 infrastructure implementation. DBS highlights sector strength in high-tech manufacturing (8.7%), renewable energy (12.3%), and consumer services (7.1%), with electric vehicle production up 35% y/y in January. Still, DBS flags risks including geopolitical trade tensions, local-government financing vehicle debt, demographic headwinds, commodity volatility, and financial-market instability. Overall, the outlook suggests China economic growth momentum could broaden beyond exports and support regional demand—important for macro-sensitive crypto sentiment and liquidity. China economic growth is the central trading narrative for early-2025 risk appetite.