China’s Economic Revival: Optimism Grows Amid US Trade Talks, But Housing Market Woes Linger
China’s Economic Outlook Brightens Amid US Trade Talks but Housing Slump Persists
By Bob Mason | Published: November 25, 2025
US and China now talk. Leaders meet to ease trade issues. This call builds hope in financial markets. Yet China fights a long drop in housing. A weak home market lowers buyer trust and spending.
Improved US-China Trade Dialogue Lifts Market Sentiment
On November 24, President Trump of the US spoke by phone with President Xi of China. They met earlier at the G20 summit on October 30. The call came off as a positive step. Trump used his social site, X, to share his views. He wrote, "I had a very good call with President Xi. We spoke on Ukraine, Russia, Fentanyl, Soybeans, and more. Our bond with China is very strong! This call follows our strong meeting in South Korea. Since then, both sides have kept our current points. Now we look at the wider picture."
The leaders agreed to hold more top-level talks. Trump plans a visit to Beijing in April. Xi will meet US leaders later this year. These talks ease fears of ending the one-year trade pause set last October. That pause gave stocks a boost in China.
Persisting Trade Policy Uncertainties
The call sounded good, but some trade points stayed unsolved. Neither side mentioned the 47% US tax on some Chinese goods. They also skipped the US chip supply limits for China. These gaps add weight to trade troubles. Commerce head Howard Lutnick said that a decision on letting Nvidia sell advanced AI chips to China now waits for President Trump. If export limits ease and China moves on rare earth exports, tax cuts might occur soon. For now, the trade break stays fragile.
Housing Market Troubles Drag on China’s Domestic Economy
Even as trade stress falls, China still faces home market pain. The property market drops and affects buyer trust and spending. Reports show Beijing studies steps to help the market. Ideas include mortgage support for first-time buyers, better income tax rebates for those with loans, and lower transaction costs for homebuyers. These plans have been under study since the third quarter of 2025 but have not stopped falling sales and prices.
Data show the problem clearly. Fixed-asset investment fell 1.7% over the first ten months of 2025. In October, investment dropped 12%, after five months of slow declines. The home sector led this fall with a 14.7% drop. Retail sales grew only 2.9% in October, down from 3.0% in September and far less than 6.4% in May. This drop shows a spillover from the weak home market to general spending.
Pessimism from Property Market Analysts
John Lam of UBS now sees the market in a worse light. He predicts falling prices for at least two more years as demand weakens. Many homebuyers in the past decade now face losses, which further reduce family wealth and spending. While mortgage support might ease some strain, such help works only if home prices stabilize. If prices keep falling, these steps may not restore buyer trust.
Markets React to Easing Trade Tensions
Softer trade talks helped stocks in both China and Hong Kong. On November 25, the CSI 300 index rose by 0.48% to 4,469 in early trade. Losses for November narrowed to 3.65%. In Hong Kong, the Hang Seng Index climbed by 0.84%. That rise moved the index into slight monthly gains of 0.11%. Even as trade talks lift investor hope, many watch how Beijing will act to boost its home economy.
Looking Ahead
The coming months will test China’s future. Keeping a trade pause and moving toward tax cuts may support export jobs. At the same time, reviving the home market and boosting local spending remains key to reaching a 5% GDP rise in 2025. Investors will track industrial profits, manager surveys, and policy news. They will watch closely to see if China can build enough strength to face its challenges.
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