Rabobank strategists have highlighted renewed weakness in China's economy, citing official PMI data that shows both manufacturing and non-manufacturing sectors have slipped back into contraction territory. Domestic demand remains soft, and the recent Politburo meeting did not provide new stimulus measures, instead emphasizing the faster implementation of existing policies [1].
The report notes that China continues to rely heavily on exports to support growth, as domestic economic challenges persist. These include weak consumer demand, declining foreign direct investment, subdued business investment, and ongoing overcapacity in parts of the industrial sector. While record trade surpluses may boost headline growth figures, Rabobank warns that this is not a sustainable foundation for the economy or its international relationships [1].
Rabobank expects China's growth trend to drift below the authorities' 4.5%-5.0% target range in the coming years, projecting growth of around 4.5% in 2026 and 4.2% by 2027. The strategists argue that China will likely be pushed towards a more consumption-driven growth model, a transition that could be costly and disruptive, especially if global trade tensions intensify [1].
The report also highlights the impact on Europe, as Chinese firms seek overseas markets to absorb excess production. In response, the EU has introduced policies to strengthen domestic production, reduce supply chain vulnerabilities, and limit exposure to external economic pressures. However, Rabobank notes that while a more coherent framework is emerging from Brussels, progress in implementation remains slow and uneven [1].
CONCLUSION
Rabobank's analysis points to a weakening growth outlook for China, with policymakers focusing on existing measures rather than new stimulus. The continued reliance on exports and slow domestic reforms suggest ongoing challenges, with potential implications for global trade dynamics and European policy responses.