China Indices Near Decade Highs as Exports and Stimulus Lift Outlook

Mainland China indices hover around decade highs as upbeat Chinese economic indicators signal a resilient economy despite US tariffs and the ongoing housing crisis.

Chinese exports soared in December, signaling strong economic momentum at the turn of the year. External demand strengthened as US-China trade tensions eased, aligning with improved sentiment toward the Chinese economy.

Upbeat economic data coincided with fresh stimulus pledges from Beijing, supporting a positive medium-term outlook for Mainland China indices.

Below, I will explore the key drivers behind recent gains, the medium-term (3-6 months) market outlook, and the key technical levels traders should watch.

Chinese Exports Soar, Defying US Attempts to Curb Reliance on China

Trade data from China indicated a sharp increase in demand. The data reinforced expectations that Beijing will achieve its 5% GDP growth target for 2025.

Chinese exports surged 6.6% year-on-year (YoY) in December, up from 5.9% in November. Economists expected export growth to slow to 3%. Meanwhile, imports rose 5.7% YoY in December, up from 1.9% in November, indicating robust domestic demand and a positive outlook for exports.

Mohamed A. El-Erian, economist and former CEO of PIMCO, commented on the December trade data, stating:

“The country’s trade surplus hit an eye-popping record of $1.2 trillion, as the fall in exports to the U.S. was more than offset by higher shipments to other countries — some of which will push back harder this year.”

Exports to Africa rose 25.8%, while exports to ASEAN and EU countries increased 13.4% and 8.4%, respectively. Notably, exports to the US fell 20%.

El-Erian’s comments on potential pushback underscored the increasing risk of non-US tariffs on Chinese goods.

Stimulus Targets Housing Sector and Domestic Consumption

Concerns about the demand outlook likely incentivized Beijing to kick-start 2026 with fresh stimulus to stabilize the housing market and boost domestic consumption.

China’s Ministry of Finance reportedly announced measures to bolster the housing market. According to CN Wire:

“From Jan 1, 2026, to Dec 31, 2027, taxpayers who sell their primary home and repurchase another within one year are eligible for a full or partial refund of their personal income tax paid on the sale.”

China’s housing crisis has weighed on consumer sentiment and domestic consumption, challenging Beijing’s efforts to lift household spending. Retail sales growth slowed from 2.9% YoY in October to 1.3% in December, down sharply from 6.4% in May.

The news boosted demand for real estate stocks. The Hang Seng Mainland Properties Index (HSMPI) rallied 1.71% in early trading on Thursday, January 15, extending its gains from the previous session.

Outlook Remains Positive as Fresh Stimulus Aims to Ease Reliance on External Demand

Measures to stabilize the housing market and boost domestic consumption will likely be crucial in 2026, given downside risks to external demand.

Natixis Asia Pacific Chief Economist Alicia Garcia Herrero recently warned:

“The Chinese economy is not rebalancing but rather digging deeper into its export dependence. If 2026 brings more protectionism, China’s deflationary trends will be even more entrenched unless a big stimulus is launched, which is not yet in the cards.”

Garcia Herrero’s comments aligned with the International Monetary Fund’s (IMF) concerns about China’s economic outlook. In December, the IMF raised its 2025 growth forecast from 4.8% to 5.0%. The IMF cited lower tariffs and macroeconomic stimulus as reasons for the upward revision. However, the IMF also emphasized the need to address imbalances in the Chinese economy and prioritize a transition to a consumption-driven economy.

Policy Signals from Beijing in Focus

Later on Thursday, January 15, the People’s Bank of China and China’s forex regulator will be in the spotlight. CN Wire reported:

“China’s State Council Information Office will hold a press conference at 3:00 PM on Thursday, January 15, 2026. At the event, Zou Lan, spokesperson and Deputy Governor of the People’s Bank of China, and Li Bin, Spokesperson and Deputy Administrator of the State Administration of Foreign Exchange, will discuss the effectiveness of monetary and financial policies in supporting the high-quality development of the real economy and answer questions from reporters.”

Crucially, further pledges to lower interest rates would boost demand for Mainland China-listed stocks, supporting the bullish short- to medium-term outlook for Mainland indices.

Goldman Sachs Sees Supportive 2026 Growth Backdrop

This week, Goldman Sachs released its 2026 China Macro Outlook report, signaling a positive economic outlook. The US banking giant projected GDP growth of 4.8% for 2026, above a consensus GDP growth forecast of 4.5%. Goldman Sachs stated:

“Despite low household consumption and labor market weakness, growth will be driven by exports, policy easing, and less drag from its declining housing market.”

Key Data and Policy Developments Ahead

Looking ahead, next week’s GDP, retail sales, industrial production, house price data, and unemployment numbers will be key. Beyond the data, traders should closely monitor signals from Beijing on monetary and fiscal policy. Upbeat numbers and further policy support would reaffirm the bullish outlook over the short to medium term.

Key Downside Risks to the Bullish Outlook

However, downside risks remain, potentially derailing the positive outlook. These include:

• Deteriorating US-China relations and a breach of the fragile trade war truce. This week, US President Trump announced a 25% tariff on nations doing business with Iran. Meanwhile, there were reports of Beijing regulating imports of foreign AI chips.
• Global tariffs on Chinese shipments.
• Beijing delays rate cuts and fresh fiscal stimulus.
• Weaker demand for Chinese goods and services would squeeze margins, affecting wage growth, the labor market, and private consumption.
• Chinese housing market crisis intensifies.

These events could send the Hang Seng Index and CSI 300 below their 50-day EMAs, signaling bearish trend reversals.

Despite these risk factors, China’s competitiveness in the AI space and increased self-reliance on chip manufacturing reinforce the constructive short- to medium-term bias for Mainland China indices.

Markets are also optimistic that Beijing can boost domestic demand through subsidies and lower borrowing rates, while stabilizing the housing market.

Medium-Term Outlook: Bullish

Recent Chinese economic data has lifted sentiment toward China’s outlook. Stimulus targeting the housing sector, the labor market, and domestic consumption would support the economy in 2026.

Given the macroeconomic backdrop and Beijing’s continued efforts and pledges to deliver fresh policy support, the outlook for Mainland China’s indices remains bullish.

CSI 300 Technical Outlook: Resistance Levels in Focus

Technicals and fundamentals remain aligned in early trading on Thursday, January 15. Viewing the daily chart, the CSI 300 remains above its 50-day and 200-day EMAs, indicating bullish momentum.

A breakout above the January 13 high of 4,817 would bring 5,000 into play. A sustained move through 5,000 would open the door to testing the 2021 all-time high of 5,931. Holding above the 50-day EMA would be crucial for the bullish outlook.

Hang Seng Index Forecast: Bullish Outlook Intact

The Hang Seng Index’s outlook mirrors the CSI 300’s, with the index trading above its 50-day and 200-day EMAs. These EMAs signal bullish momentum, complementing positive fundamentals.

A breakout above the October 2025 high of 27,382 would pave the way toward 28,000. A sustained move through 28,000 would bring 30,000 into play for the first time since 2021.

Conclusion: Will Beijing Cut Rates?

To summarize, the short- and medium-term outlook remains constructive. Beijing’s pledges for more policy support, China’s progress in the AI space, and the US-China trade war truce are likely to bolster demand for Mainland China and Hong Kong-listed stocks.

However, housing sector trends, global trade developments, and company margin squeezes remain factors for consumers and private consumption. Meaningful policy measures would likely send the CSI 300 to its 2021 all-time high of 5,931.

Discover strategies to navigate this week’s market trends here.