Under the narrative of "the rise of the East and the fall of the West", foreign institutions have recently raised their expectations for China's economic growth.

In the past month, economists from HSBC, ANZ, and Citigroup have all raised their GDP forecasts for China. They stated that a series of recent economic stimulus policies and better-than-expected economic data are the main reasons for their revised expectations.

On the 26th, the team led by the Chief Economist of Morgan Stanley, Xing Ziqiang, also pointed out in a research report that China's economic performance in the first quarter exceeded expectations, with strong investment momentum in ShenZhen New Industries Biomedical Engineering, prompting the team to raise their full-year economic growth forecast by 0.5 percentage points, close to the market median.

Institutions have raised their expectations for China's GDP growth.

Media reports indicate that the recent adjustments in expectations by foreign institutions stem from unexpectedly positive economic data released last week, suggesting that the stronger stimulus measures initiated last fall are starting to take effect. In January and February of this year, retail sales, which measure consumer spending, accelerated growth, and both investment and industrial production exceeded expectations.

In addition, initial signs of stabilization have emerged in China's real estate market. Data shows that the new home sales of the 100 largest real estate developers in China increased by 1.2% year-on-year in February to 188 billion yuan.

At a press conference held by the State Council Information Office on March 17, Fu Jinling, Director of the Economic Construction Department of the Ministry of Finance, stated that the central government would allocate subsidy funds to help international consumer center cities expand inbound consumption. In 2025, the central government will arrange 66.74 billion yuan in employment subsidy funds to support local implementation of employment and entrepreneurship support policies, promoting full employment.

In this regard, HSBC economists stated in a report last week:

"The government's determination to support growth has strengthened, providing a more robust and urgent policy response to boost domestic Consumer and better-than-expected economic activity data, which are key reasons for our more positive outlook on growth."

Many of Goldman Sachs' clients also believe that China has once again become the focus of investment attention. Goldman Sachs' strategists stated in a report that most investors consider China’s AI narrative a game changer, and they also welcome more economic stimulus measures.

The first quarter performed better than expected, leading to an upward revision of the annual economic forecast.

Morgan Stanley noted in its latest Research Reports that it has raised its forecast for China's economic growth rate in 2025, primarily based on two main factors:

1. Strong first-quarter data support: Considering the strong performance of economic data in January-February, the actual GDP year-on-year growth rate in the first quarter is expected to reach 5.4%, the same as last year’s fourth quarter and higher than last year’s third quarter. The actual economic momentum may be stronger than the data shows, especially when accounting for the Chinese New Year and working day factors. The effects of policy support for Consumer are gradually becoming evident. Supported by policies, mobile phone sales have surged, while the momentum in home appliance sales remains.
2. Investment in XINXINGCHANYE has grown: With the implementation of AI and government funding support, the investment in XINXINGCHANYE significantly enhances the contribution of capital formation to GDP. This new momentum has become an important support for economic recovery.

Morgan Stanley believes that this trend may continue into the second quarter.

The report also pointed out that, thanks to the relaxation of the strict purchase restrictions, the housing transaction volume in some cities has recently rebounded, home prices are stabilizing, and pent-up demand is being released. It is expected that starting in 2026, as the impact of tariffs gradually fades, regional Real Estate markets stabilize, and social welfare reforms continue, China will experience moderate re-inflation.

Regarding Exchange Rates, considering the central bank's current priority to stabilize Exchange Rates among its multiple policy goals, Morgan Stanley has raised its predictions for the Renminbi Exchange Rate; entering the second half of the year, the central bank may maintain a moderately accommodative liquidity environment.