China is grappling with domestic economic challenges at the same time that external risks from U.S. trade threats are rising.

In response, Chinese policymakers have announced a raft of stimulus measures, which they double down on just last week.

But will the stimulus be enough?

In the short term, we're probably going to see an expansion of fiscal support, much greater

than we've seen already. Probably in the first quarter, we will finally start to see real

attempts to stimulate the demand side of the economy, and that will be very positive in the short

term. But ultimately, it's only a

short-term solution. I'm Alison Nathan, and this is Goldman Sachs exchanges. Each month, I speak with

investors, policymakers, and academics about the most pressing market-moving issues for our top of my report from

Goldman Sachs research. This month, I spoke with China Watchers Huay Shan, chief China economist at Goldman

Sachs, and Michael Pettis, professor at Peking University's Guanha School of Management.

We discussed China's economic challenges and just how effective the policy stimulus could be in

addressing them. I started off by asking my colleague Kui to level set on how China's growth

has evolved in recent years. There were quite a few surprises in the Chinese economy over the

past a couple of years. If you think back the early 2023 reopening,

if China had followed any other economies' experience,

there should be a very strong rebound,

but 2023 growth was only 5.2% after 3% in 2022.

So that was a disappointment, reopening boosted services activity.

And then coming in 2024, we had this a surprise of very strong exports, but domestic demand

continue to weaken, especially in the middle part of the year, I think that was a clear

downside surprise. GDP growth quarter after quarter in young year terms was decelerating,

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