Macquarie Economics has flagged an increased probability that Beijing will deploy additional fiscal measures in the coming months to prevent a sharper deceleration in activity, but the bank does not expect authorities to revert to the large-scale, economy-wide stimulus that was adopted in 2024.
In a note issued on Tuesday, Macquarie economists Larry Hu and Yuxiao Zhang set out their assessment of near-term growth and policy reaction. They wrote that even if gross domestic product growth slows in the second quarter to roughly 4.4%, the economy would nonetheless grow by about 4.7% in the first half of the year.
The economists judged that hitting the governments full-year growth target of 4.5% to 5.0% does not look unduly difficult from the current starting point. That assessment supports the view that authorities can afford to take a measured approach rather than immediately returning to the aggressive, broad-based stimulus seen previously.
Macquarie noted several considerations that inform Beijings likely strategy. First, policymakers can wait for additional incoming data before committing to stronger policy moves. Second, developments in the external environment are a factor: with reports that the US and Iran are moving toward a final agreement, Chinese authorities may prefer to pause until there is greater clarity on international conditions.
The bank also emphasised the persistence of what it calls the "Just Enough" rule in Beijings approach to macro policy. That framework, Macquarie said, has reduced the need for dramatic domestic stimulus in the face of an AI-led export upswing.
"Consumption is weak not because policymakers cannot boost it, but because under the 'Just Enough' rule, they do not need to," the economists wrote.
Macquaries analysts expect the upcoming Politburo meeting, scheduled for late July, to adopt a somewhat more supportive tone, consistent with targeted fiscal measures rather than large-scale stimulus. That forecast implies policymakers will likely fine-tune support to stabilise growth while avoiding a full policy pivot.
Overall, Macquaries view points to calibrated fiscal easing aimed at preventing a sharper slowdown, combined with a willingness to wait for further data and external developments before taking stronger, economy-wide action.