China What do local clients think about the economy Local marketing takeaways, September 2026

Economics Research 14 September 2026 | 12:19AM HKT

China: What do local clients think about the economy? Local marketing takeaways, September 2026

Over the past week, we met in Shanghai with onshore investors across equities, fixed Lisheng Wang | income, and corporates, including mutual funds, private equity firms, bank and Goldman Sachs (Asia) L.L.C. insurer asset managers, and listed companies. Compared with end-June, local clients appeared more risk-averse amid near-term uncertainty, especially over Fed policy and the upcoming Trump-Xi meeting. On China’s macro outlook, most investors we met with expect the “K-shaped” economy to persist and expressed greater concerns about domestic demand, especially consumption. Most anticipate policy support to strengthen through year-end relative to previous months, but remain cautious on the scale, duration, and implementation efficiency of incremental easing, particularly given recent property policies, tighter tax collection, and still-elevated anti-corruption investigations. Clients appear to remain confident in global AI capex in 2026-27, especially in the US and China, but views diverged on 2028 and beyond. On markets, clients shared our view that the RMB will appreciate gradually and long-term government bond yields will stay low for longer.

1. Risk aversion amid near-term uncertainty

Despite a busy September calendar of global macro catalysts, onshore investors remain in wait-and-see mode, seeing no clear near-term market direction amid uncertainty over Fed policy and the upcoming Trump-Xi meeting. Most fixed income clients expect a September Fed hike, although this view was not broadly shared by equity clients we met with during our trip. Following the stronger-than-expected August core CPI, our US economics team now expects the Fed to raise policy rates in September – While they see no compelling economic case for a hike, they believe the FOMC may worry that holding rates steady would undermine perceptions of Fed credibility and push longer-term yields higher. Onshore clients appeared to have low expectations for the Trump-Xi meeting and do not anticipate a broad US-China agreement in the near term, but they also do not expect the September summit to be derailed. Equity clients focused more on which Chinese companies might accompany President Xi to the US, while fixed income clients were more interested in potential RMB moves around the meeting.

2. Rising concerns about domestic demand and growing expectations for policy easing

Most clients expect the “K-shaped” economy to persist. While they remain constructive on China’s exports, concerns about domestic demand—especially consumption—has increased. Weaker-than-expected Q2 GDP and July activity data, as well as still-subdued growth momentum in August, have deepened onshore

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investors’ concerns about China’s near-term macro outlook. Some expect real GDP growth to remain below 4.5% yoy in Q3, after 4.3% yoy in Q2. Investors also highlighted the growth drag from tighter tax collection and recent property policies, and view ongoing technological breakthroughs as providing little support to domestic consumption. Recent signals from the State Council, MOF, and NDRC pointed to faster implementation of planned easing since late August, raising market expectations for additional stimulus later this year. Onshore clients broadly shared our view that policy support will strengthen through year-end relative to previous months and continue to favor high-tech sectors and investment—particularly the “Six Networks” projects (“六张 网”项目)1—over consumption.

3. Low confidence in the effectiveness of cyclical easing

Although onshore investors we met with expect incremental easing in the coming months, they have low expectations for its scale, duration, and implementation efficiency, given the continued emphasis on the “correct view of performance” (正确政绩 观) and intensifying anti-corruption investigations amid a year of local government leadership reshuffles.…