Goldman Sachs expects China to ramp up fiscal and monetary easing to counter the sharper-than-expected impact of new US tariffs, which it estimates could shave at least 0.7 percentage point off Chinese GDP growth this year. In a Sunday report, the bank said the US tariffs—now totalling 54 per cent on Chinese goods after a new 34 per cent levy by President Donald Trump—have reversed earlier optimism over China's economic momentum and risk derailing growth that was tracking ahead of forecasts. Citing a commentary in the state-run People's Daily, Goldman said China may cut interest rates, lower the reserve requirement ratio, and expand its fiscal deficit through special bonds and other extraordinary measures to boost domestic demand. Despite the tariff shock, Goldman maintained its 2025 GDP growth forecast for China at 4.5 per cent, supported by a stronger-than-expected first quarter and anticipated stimulus, but trimmed its 2025 corporate earnings growth outlook to 7 per cent from 9 per cent. The bank also downgraded Taiwan to underweight in its Asia allocations, citing its high sensitivity to US-China trade tensions. Attribution: Reuters Subediting: M. S. Salama
