Why Goldman Sachs is so optimistic about China

In a surprising turn of events, China has managed to outmaneuver the United States in the ongoing trade war, thanks to President Xi Jinping’s strategic patience and exploitation of President Donald Trump’s eagerness for a quick deal. This has led to another delay in the economic arms race initiated by Trump, pushing any potential trade agreement to 2027 at the earliest. This delay not only gives the U.S. Supreme Court ample time to potentially rule Trump’s tariffs unconstitutional but also allows Beijing to further insulate its economy from U.S. pressures. China is projected to grow by 5% this year, despite the tariffs, while the U.S. faces a shaky labor market and rising inflation. Goldman Sachs predicts even stronger growth for China in 2026, potentially reaching 6%, driven by government efforts to boost manufacturing and exports. However, challenges remain, including a property crisis, high youth unemployment, and an aging population. Meanwhile, escalating tensions between China and Japan over Taiwan add another layer of complexity to the geopolitical landscape. Despite these hurdles, China’s economy appears resilient, and Trump’s efforts to destabilize it have so far fallen short.