BNP Paribas analysts expect China’s GDP growth to be 5.0% in 2025, unchanged from 2024. They forecast a moderate slowdown in 2026 as domestic demand weakens and pressure in the property sector continues.
They expect fiscal and monetary policy to remain supportive in 2025 and 2026. However, they also expect policymakers to stay cautious while trying to boost private consumption.
Near Term Export Outlook
In the near term, they expect Chinese exports to remain competitive. They also expect exports to face new protectionist measures.
They note that deflationary pressures are still present. They expect only a small improvement in 2026.
A moderate slowdown in 2026, after 5.0% growth in 2025, points to a more defensive approach. Recent data from China’s National Bureau of Statistics already shows cooling momentum, with the January 2026 manufacturing PMI at 49.2 (contraction). Traders may consider buying put options on broad Chinese equity indices, such as the FTSE A50, to hedge against a possible downturn.
Deflation remains a key theme in the coming weeks. The latest official data shows the Consumer Price Index (CPI) fell 0.6% year over year in January 2026, the fourth straight monthly decline. This backdrop could pressure the yuan, which could make call options on USD/CNH a potential way to position for further currency weakness.
Policy Signals And Market Volatility
Authorities appear supportive but cautious, which reduces the odds of a large, market-moving stimulus. The People’s Bank of China’s decision last week to keep its key lending rate unchanged, despite weak inflation data, supports this cautious stance. This tension—slowing growth but restrained policy—could increase volatility, making strategies such as straddles on the Hang Seng China Enterprises Index worth considering.
Exports face rising headwinds from new protectionist actions. After targeted tariffs on electric vehicles last year, reports this month suggest the EU is opening a new anti-subsidy investigation into Chinese wind turbines. Traders could consider puts on export-focused industrial ETFs with high exposure to European demand.
Continued stress in the property sector is weighing on domestic demand. Data from early February 2026 shows new home sales among the top 100 developers fell by more than 30% from a year earlier, suggesting the issue is still unresolved. Bearish strategies, such as selling call spreads on real estate-focused ETFs, may be one way to express this ongoing weakness.
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