China’s retail sales expected to exceed 50 trillion yuan by 2025, indicating significant growth

    by VT Markets
    /
    Jul 18, 2025
    China remains the world’s second-largest consumer market, with retail sales growing by 5.5% annually over the past four years. By 2025, it’s expected that retail sales in China will exceed 50 trillion yuan. Foreign investment in China is increasing by more than 5% each year, making it one of the top three destinations for investors worldwide. Since the start of the 14th five-year plan, foreign investment has surpassed $700 billion, exceeding initial goals.

    Resilience in Foreign Trade

    China shows strong resilience in foreign trade, keeping its top spot in global goods trading. Its export market share is over 14%, while imports hold steady at more than 10%. We believe the market is being overly pessimistic about China’s economic stability. Recent data indicates that the CBOE China ETF Volatility Index (VXFXI) has dropped from highs of around 40 earlier this year, pointing to a decrease in extreme fear. This creates a good opportunity for traders to prepare for a rebound before positive sentiment takes hold. While Wang mentions strong long-term growth in retail, the latest figures paint a more complex picture. Retail sales in April grew by just 2.3%, slightly below expectations. However, we view this as an opportunity rather than a weakness. The market seems too focused on short-term numbers, overlooking the strong policy commitment to boosting consumption. This opens the door for potential gains with call options on consumer-focused ETFs like KBA. Wang’s confidence in foreign investment contrasts with Q1 2024 data, which showed a year-on-year drop in actual foreign capital use. This gap between official statements and recent data is causing current market mispricing. For traders, this suggests strategies that take advantage of volatility, such as selling cash-secured puts on undervalued large-cap tech stocks for collecting premium.

    Strength in Trade and Valuation

    The strength in foreign trade is backed by solid numbers; April’s exports rose by 1.5%, and imports climbed 8.4%. This underlying strength supports the economy and hasn’t yet been reflected in the offshore yuan (CNH), which is under pressure. We see this as an opportunity to buy call options on the yuan, anticipating that strong trade will eventually lift the currency. Looking back, Chinese equities are trading at low valuations compared to their historical averages after recent significant sell-offs. The government’s supportive tone suggests that the period of strict policy tightening may be ending, mirroring conditions seen at previous market bottoms. Accordingly, we are considering longer-dated call spreads on the Hang Seng Index to take advantage of a potential recovery while managing risk. Create your live VT Markets account and start trading now.

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