Herrero warned that rising protectionism necessitates that China adapt its economic model by 2025 to avoid negative outcomes.

On January 13, 2025, East Asia Econ reported that the Chinese Yuan (CNY) could depreciate to 7.7 against the US dollar, influenced by tariffs and onshore rate changes.

This depreciation is notable as it positions the CNY at its lowest real value since 2014, although it is aiding China's exports and trade surplus.

Youth unemployment was reported at 16.1% in November 2024, coupled with low consumer sentiment, which hinders spending efforts and overall economic recovery.

However, ongoing US-China tensions and insufficient stimulus focused on consumption may adversely affect stock market demand in Hong Kong and Mainland China.

The Hang Seng Index has also faced a downturn, dropping 4.59% year-to-date in 2025, following an 18% gain in 2024.

Concerns have been raised about the potential for further US tariffs during Trump's presidency, which could exacerbate the CNY's weakness and negatively impact demand.

In December 2024, Beijing announced stimulus measures aimed at increasing domestic consumption as part of the 14th Five-Year Plan, which spans from 2021 to 2025.

As of early January 2025, the CSI 300 Index and SSE Composite Index have seen declines of 3.31% and 3.78% respectively, following a strong performance in 2024.

Natixis Asia Pacific Chief Economist Alicia Garcia Herrero noted that China's economic model faces challenges, with industrial production outpacing retail sales growth.

In light of these economic challenges, People's Bank of China Governor Pan Gongsheng emphasized the need for macroeconomic policies that focus on boosting household consumption and social support.

Despite these intentions, household consumption in China remains below 50% of GDP, significantly lower than the Asia-Pacific average, complicating economic adjustments.