Commentary: Investors Should Proceed With Caution Amid Extended Trade Talks
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Aerial view of Shanghai Port Container Terminal on July 30th. Photo: IC Photo
China’s second-quarter GDP growth surpassed expectations, but the deferral of a tariff deadline means uncertainty persists. At the same time, the gradual progress in U.S.-China trade negotiations is helping to ease market concerns and alleviate pressure on Chinese consumption and investment, which is certainly a welcome development for policymakers.
Tariff truce extended, trade talks press on
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- China’s Q2 GDP grew 5.2% year-over-year, beating expectations, but economic momentum slowed in June and full-year growth is forecast at 4.7%.
- U.S.-China tariff truce may be extended, but no major breakthroughs were reached; the effective U.S. tariff rate is expected to stabilize at ~15% by year-end.
- Policy stimulus remains moderate, with possible further monetary easing and targeted real estate support; “anti-involution” measures address overcapacity and deflation risks.
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Who’s Who
- UBS Wealth Management
- UBS Wealth Management employs Hu Yifan, who serves as their Asia-Pacific chief investment officer and head of macroeconomics.
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What Happened When
- First half of 2025：
- China’s GDP grew 5.3% year-over-year.
- Second quarter of 2025：
- China’s GDP grew 5.2% year-over-year, driven primarily by industrial value-added and strong export demand.
- May 2025：
- Major promotions in China led to consumer demand being pulled forward, affecting June retail sales.
- June 2025：
- Economic data for China showed weakening growth momentum, especially in retail sales and fixed-asset investment.
- July 2025：
- China’s Politburo meeting signaled a relatively balanced policy tone with no signs of large-scale stimulus. The government also proposed an 'anti-involution' campaign to address overcapacity and price competition in several industries.
- July 27-30, 2025：
- China and the U.S. held a new round of trade negotiations in Stockholm, Sweden. Both sides indicated that the tariff truce, originally set to expire on Aug. 12, 2025, could be extended for another 90 days.
- Hours before August 1, 2025：
- President Trump announced a series of new tariffs: 35% on goods from Canada, 50% from Brazil, 25% from India, 20% from Taiwan region of China, and 39% from Switzerland.
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