Goldman Sachs, Citi, Nomura: China's Economy Stabilizes Short-Term, but 2025 Sustainability in Question
nashnova research
Q3 GDP grew 4.5% year-on-year as retail, industrial output and services all improved in September — three major banks agree the economy has stabilised, yet sharply disagree on whether domestic demand can take over from exports in 2027.
What actually improved in Q3?
Q3 real GDP grew 4.5% y/y, up from 4.3% in Q2; quarter-on-quarter growth hit 1.2%, up from 0.9%.
September data across the board: industrial output +5.5%, retail sales +1.1%, services production index +4.8% — all accelerating from August.
This means → the recovery broadened beyond factories into consumption and services. Goldman stressed this point: the tertiary sector accounts for roughly 58% of the economy, so even a modest services pickup moves the needle.
How wide is the gap between exports and domestic demand?
September USD-denominated exports surged 36.3% y/y, while retail sales rose just 1.1%. In plain terms = the economy is improving, but foreign orders are doing the heavy lifting — domestic spending has not caught up.
The retail mix is weak too: auto sales fell 21.2%, home appliances grew only 1.9%; telecom equipment jumped 31.1%, partly driven by price increases.
Nomura adjusted retail figures by CPI and estimated real retail growth at just 0.2%. This reflects how little of the headline improvement survives once prices are stripped out.
How did each bank adjust its forecasts?
Goldman raised its full-year GDP call from 4.5% to 4.6%, but cut the Q4 q/q annualised rate from 4.5% to 4.0%. This means → the upgrade simply banks the Q3 beat; Goldman is not expecting further acceleration.
Citi held its full-year forecast at 4.6%. By its math, Q4 growth of just 4.3% clinches the annual target, so near-term policy will likely focus on execution rather than fresh stimulus.
Nomura was the most bullish near-term — Q4 raised from 4.5% to 4.8%, full-year to 4.7% — yet kept 2027 at 4.0%, below the consensus 4.4%. In plain terms = Nomura thinks Q4 will look great, but the drivers — low base, strong exports, short-term policy — may not carry into next year.
Is the property market recovering or still falling?
Pockets are improving: among 70 major cities, those with rising second-hand home prices month-on-month grew from 3 to 9. Shanghai second-hand prices rose 0.8% y/y — the first positive reading in over three years.
But the national picture is still negative: 70-city second-hand prices fell 0.26% m/m, new-home sales area dropped roughly 20%, and property investment fell 26.2%.
This means → tier-one cities are stabilising first, but a nationwide cycle turn has not arrived. Citi added that the shift toward completed-unit sales could further weigh on property activity in 2027.
What is the biggest uncertainty for next year?
Can exports hold? Nomura worries the global AI boom may cool, auto exports face external policy constraints, and the current 36.3% growth rate risks reverting to normal.
Will consumers open their wallets? Citi flagged that the urban household savings rate hit 39.2% in the first three quarters, versus 36.2% in the same period of 2019. In plain terms = households have money but are choosing not to spend — one good retail month does not prove a trend reversal.
Is new-economy momentum peaking? September high-tech industrial output still grew 15.3%, but integrated-circuit production growth slowed to 18.4% and industrial robots to 18.9%. Citi reads these as early signs of a possible plateau.
All three banks share one bottom line: near-term stabilisation is a fact. The open question is whether domestic demand can genuinely take over from exports in 2027. This reflects a judgment that will directly determine whether policymakers need to step up stimulus again.
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