Goldman Raises China Outlook as Tariff Truce Lifts Market Sentiment

Global markets are recalibrating expectations for China’s economic performance following a sudden softening of trade tensions with the U.S.

In response to the newly announced tariff suspension, Goldman Sachs has raised its 2025 GDP forecast for China from 4% to 4.6%, signaling renewed confidence in short-term recovery momentum.

The 90-day deal reduces import duties on both sides, offering a window of relief amid years of economic friction. While not a definitive solution, the development has already made waves. Financial firms like UBS and Natixis quickly followed suit, raising their own projections for China’s growth. Morgan Stanley now expects second-quarter GDP to top 4.5%, with sustained strength into the next quarter.

Chinese equities reacted swiftly, with Nomura upgrading its view on mainland stocks and Citi boosting its target for the Hang Seng Index. Tech and consumer sectors are seen as the biggest winners in the near term.

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Still, economists remain cautious. The agreement’s temporary nature and unresolved structural problems—ranging from property market weakness to mounting local government debt—pose risks to a full-scale recovery. Some analysts warn the current optimism may fade if lasting policy changes don’t follow.

Though the tariff pause offers short-term fuel, the long-term outlook for China hinges on deeper reforms and durable trade frameworks. For now, the market is watching whether this truce evolves into something more substantial—or simply resets the countdown clock.

Alexander Stefanov