China: Moderate slowdown with modest policy support – BNP Paribas

💡 DMK Insight

China’s GDP growth hitting 5.0% is a mixed bag for traders right now. While the uptick from 4.5% in Q4 2025 seems positive, the K-shaped recovery indicates that not all sectors are benefiting equally. Dynamic exports could provide a boost to commodities and related currencies, but sluggish domestic demand and property sector stress raise red flags. Traders should watch how this divergence plays out, especially in markets like AUD/USD, which often reacts to Chinese economic data. If domestic consumption remains weak, we might see increased volatility in Chinese equities and commodities tied to domestic demand. Here’s the kicker: if the anticipated slowdown materializes, it could lead to further easing from the People’s Bank of China, impacting the yuan and creating ripple effects across global markets. Keep an eye on key levels in the yuan and commodities like copper and iron ore, as they could signal broader market sentiment. Watch for any policy shifts or economic indicators in the coming months that could confirm or contradict this trajectory.