• Goldman Sachs revises China's 2024 GDP growth forecast to 4.6%, up from 4%, citing US tariff reductions.
  • The bank now expects flat exports this year, abandoning its earlier projection of a 5% decline.
  • Despite the upgrade, growth remains below Beijing's 5% target, with structural challenges persisting.

A Cautiously Optimistic Outlook

Goldman Sachs has lifted its 2024 growth forecast for China to 4.6%, reflecting improved trade conditions after the US agreed to larger-than-expected tariff cuts. The revision, while notable, still leaves China's projected expansion shy of its official 5% target. For 2026, the bank now anticipates 3.8% growth, up from 3.5% previously.

The adjustment follows months of tense negotiations between Washington and Beijing, with the latest tariff relief offering a reprieve for Chinese exporters. "The reduction in trade barriers provides near-term stability," said a Goldman analyst who asked not to be named, citing firm policy. "But structural headwinds—from demographics to property sector risks—aren’t going away."

Trade Winds Shift

Goldman no longer expects Chinese exports to contract by 5% this year, now forecasting flat performance. The change underscores how tariff easing could bolster trade-reliant sectors, though Morgan Stanley cautioned that "durable solutions remain elusive" given ongoing geopolitical friction.

Market reaction was muted, with Asian equities showing limited movement. Investors appear to be weighing the upgraded forecasts against China's longer-term challenges, including an aging population and technological decoupling pressures. Beijing is expected to maintain accommodative policies, with further monetary easing likely in coming months.

The Road Ahead

While the tariff truce offers breathing room, analysts note China's growth trajectory continues to slow from its pre-pandemic highs. Goldman projects average annual growth of just 3.5% between 2025-2035—a stark contrast to the 9% pace seen during 2000-2019. For now though, the revised numbers suggest the world's second-largest economy may avoid a sharper near-term downturn.