China

Tariff pause gives China’s economy some breathing space, but longer-term uncertainty persists Overview Following the trade talks in May, the US and China agreed to a 90 day pause to the extreme bilateral tariffs each country imposed in April. While there remains uncertainty around the longer-term trade relationship, this agreement is sufficient to wind back some of last month’s downward revision to China’s economic outlook. We now see China growing by 4.3% in 2025 and 4.0% in 2026 (from our previous forecast of 4.1% and 3.9% respectively). That said, even following the pause, trade barriers remain substantially above the norm for the past century, and this means this revised forecast remains weaker than where we saw China’s growth potential in March. China’s industrial productio...