China’s 3Q25 GDP growth came in within market’s expectation at 4.8% y/y but the increased growth disparities highlight the risk of a sharper slowdown ahead as industrial production and exports cool. There is much more to be done for consumption, and this will be a priority for policymakers, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

3Q25 GDP moderation in line with expectations

"The growth contributions from final consumption and net exports of goods & services were steady from 2Q25 at 2.7 ppt and 1.2 ppt respectively while gross capital formation fell to 0.9 ppt (2Q: 1.3 ppt) as investment was weighed down by a more uncertain outlook. We now see China’s real GDP on track for 5.0% growth in 2025 (compared to our earlier forecast of 4.9%) with 4Q25 only required to turn in a 4.5% growth rate. The challenge will be in 2026 when the full impact of the US tariffs will likely be felt. We keep the outlook for 2026 at 4.2% for now."

"The 1Y and 5Y LPR fixings were unchanged in Oct. Monetary policy will be kept accommodative amid the renewed uncertainties from the US-China trade war. The PBOC will maintain ample domestic liquidity to support government bond issuances and amid flows to the equities. We see the resumption of US Fed rate cuts and persistent domestic deflationary pressure creating the room for the PBOC to cut its interest rate by 10-bps later this year. A further 50-bps cut to banks’ reserve requirement ratio (RRR) is also possible."

"Key discussions on the formulation of the 15th five-year plan (2026-2030) will emerge at the end of the Fourth Plenum (20-23 Oct) this Thu with details to be announced at National People's Congress (NPC) in Mar 2026."