China needs US$1.4 trillion to boost domestic consumption amid impending ‘trade war 2.0’

China might need an additional 10 trillion yuan (US$1.4 trillion) to lift domestic consumption to restore investors’ confidence, according to HSBC Asset Management’s investment outlook for 2025.

With another trade war looming with the US and a property sector that is showing no signs of a revival, China will need to seek growth by boosting domestic demand, said Caroline Yu Maurer, head of China and core Asia equities.

She said 10 trillion yuan would be sufficient to stimulate consumer spending and restore investor confidence in Chinese stocks, adding that the cash injection does not have to happen in one go or in one year, but investors would like to see a path to get there.

Since late September, Beijing has introduced a slew of measures to boost its economy, from cutting interest rates to lowering the down payment ratio for buying property. These efforts pushed Chinese stocks into a rally rarely seen in years.

However, the bull run soon lost steam, as the much-anticipated stimulus for the ailing property market and sluggish consumer spending failed to have the desired effect.

China’s benchmark CSI 300 Index has fallen by 10 per cent since a peak in mid-October, while the Hang Seng Index, which includes many big mainland Chinese companies, has lost nearly 17 per cent.