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<Research>M Stanley: CN to Cut RRR by 50 bps, Rates by 15 bps This Qtr, Launch RMB1-1.5T Stimulus in 2H25
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Morgan Stanley released a report on China’s economy, trimming its 2025 GDP growth forecast by 30 bps to 4.2% in wake of tariff repercussions. It projected quarterly growth to ease from 5.4% YoY in 4Q24 to 3.7% YoY in 4Q25. The broker anticipated China will roll out RMB1-1.5 trillion in additional stimulus measures in 2H25 and expected a gradual relaxation of U.S.-China tariffs. The 30-bps downward revision to 2025 GDP growth of China accounts for a 90-bps drag from tariffs, partially offset by a 60-bps growth boost from RMB1-1.5 trillion additional stimulus package. Morgan Stanley assumed the U.S. will phase down the weighted average tariff rate on Chinese goods to 34% by year-end, with most reductions occurring within the next 1-2 months. Morgan Stanley predicted Beijing may enforce early a RMB2 trillion stimulus plan, announced at the National People’s Congress, in 2Q25, followed by a supplementary RMB1-1.5 trillion fiscal package in 2H25. It maintained a year-end USD/RMB target of 7.5 but estimated near-term depreciation, reaching 7.4 by the end of 2Q25. AAStocks Financial News |
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