Goldman Sachs: New Cross-Border Investment Rules Aim to Regulate Tech Flows; May Imports and Exports Expected to Surge

Overview

This Goldman Sachs macro research note briefly outlines three core focal points for the Chinese market recently: first, the newly released cross-border investment regulations by the State Council and the underlying geopolitical considerations; second, the stability of the real estate market and the economy's adaptability to high energy prices as reflected in the latest high-frequency data; and third, a preview and forecast of upcoming May trade, inflation, and credit data. Overall, the report suggests that despite external geopolitical complexities and weak domestic credit demand, robust trade supported by the global AI wave and structural economic resilience are the defining characteristics at present.

Core views

Policy Level: Regulatory Focus Shifts to Managing Cross-Border Technology and Capital Flows The State Council issued a cross-border investment regulatory decree comprising 34 items on June 1. The report believes the timing of this policy may be related to the government's recent blocking of the Meta-Manus transaction. Against the backdrop of intensifying US-China tech competition and Chinese enterprises going global to acquire foreign assets, these 34 items primarily aim to establish a framework for regulating cross-border technology transfers, support the globalization of Chinese firms, and manage operational and geopolitical risks associated with overseas businesses and assets. Although personal cross-border investment is mentioned, specific measures remain to be formulated by relevant authorities. The report notes that policymakers' primary concern is to closely monitor and manage cross-border technology and capital flows in an increasingly complex geopolitical environment, rather than solely to increase tax revenue or reduce capital outflow pressures. Given the rising proportion of export settlement, significant RMB appreciation this year, and signals from the PBOC's daily fixing rate implying a slower pace of appreciation, regulators appear more inclined to structurally strengthen rule enforcement, including regarding tax collection and capital flows. High-Frequency Data: Real Estate Stabilizes, Economy Shows Resilience to High Oil Prices Tracking of the latest high-frequency data indicates that daily transaction volumes for new and second-hand homes have remained broadly stable. Recent policy easing remains localized (e.g., Guangzhou's buyback program) and focuses on expanding the scope of housing provident fund usage. On the other hand, higher energy prices continue to impact the Chinese economy: passenger flight volumes have declined while cancellation rates have risen, and coal consumption is significantly higher than levels seen in the same period last year (charts show daily average coal consumption in eight coastal provinces rose 24.6% YoY on June 2). However, judging by indicators such as daily traffic congestion indices and weekly steel production and demand, the net impact does not appear severe. Collectively, these data points suggest greater flexibility in the Chinese economy's adaptation to high oil prices. Data Preview: AI Capex Drives Trade Surge, Inflation Rebounds, Credit Remains Weak Regarding the May data to be released this week, the report holds the following views: 1. Trade: Despite energy market volatility caused by the Iran war, the sustained global AI capex boom will continue to support China's imports and exports. In USD terms, exports are forecast to grow 15% YoY and imports 30% YoY. 2. Inflation: Inflation rates are expected to trend higher; headline CPI is forecast to rise from 1.2% YoY in April to 1.4%, and PPI to surge significantly from 2.8% to 4.0% YoY. 3. Credit: Despite net liquidity withdrawals by the PBOC, interbank liquidity remains ample, pointing to persistently weak bank loan demand. Consequently, growth in bank loans and net total social financing is expected to fall below levels from the same period last year.

Analysis framework

The report employs an analytical framework combining 'policy event interpretation + high-frequency data validation + macro data forecasting.' First, by interpreting the State Council's latest decree and incorporating recent specific cases (the blocked Meta-Manus transaction), it deduces the geopolitical intent behind the policy rather than purely fiscal or foreign exchange management objectives. Second, it utilizes multi-dimensional high-frequency data (real estate transactions, aviation passenger flow, coal consumption, traffic congestion, steel production and sales) for cross-validation to assess the actual transmission effects of macro shocks (high oil prices) on the real economy, reflecting an analytical logic of 'looking at structure within aggregates and substance beneath appearances.' Finally, based on global industry trends (AI capex) and domestic financial conditions (divergence between liquidity and credit demand), it provides quantitative forecasts for upcoming official macro data to offer short-term trading references for investors.

Methodology notes

• Industry/Sector Analysis FrameworkUpstream-Midstream-Downstream Supply Chain Transmission

  Impact of Global AI Capex on China's Imports and Exports

  By analyzing the capex cycles of global upstream tech giants (e.g., US tech companies), the report deduces their pull-through effect on import/export demand in China's midstream manufacturing sector, reflecting the demand transmission logic across the global supply chain.

• Macroeconomic framework

  High-Frequency Data Cross-Validation Method

  Rather than relying on a single indicator, the report combines multi-dimensional high-frequency data—including coal consumption (production side), traffic congestion (activity side), and steel production/sales (industrial side)—for cross-comparison to more accurately gauge the real economy's response and resilience to specific shocks (e.g., high oil prices).

Key data

• May Export YoY Forecast+15%USD-denominated, supported by the global AI capex boom
• May Import YoY Forecast+30%USD-denominated
• May CPI YoY Forecast1.4%Rebound from 1.2% in April
• May PPI YoY Forecast4.0%Significant rebound from 2.8% in April
• June 2 Daily Avg Coal Consumption in Eight Coastal Provinces YoY+24.6%High-frequency data shows energy consumption significantly higher than same period last year

Impact & implications

The report suggests that the introduction of new cross-border investment regulations marks a shift toward more structured and stringent controls over technology and capital flows amidst geopolitical tensions; companies expanding overseas must pay greater attention to compliance and geopolitical risk management. High-frequency data indicates that despite rising energy costs, domestic demand in the Chinese economy (particularly real estate transactions) has not deteriorated significantly, and industrial production has demonstrated resilience, helping to alleviate excessive market concerns about 'stagflation' risks. For capital markets, robust import/export data may support earnings expectations for export-oriented supply chain companies, while a rebound in PPI could improve profit margins for upstream resource and industrial firms. However, weak credit demand suggests that domestic demand recovery still requires time, and monetary policy may remain accommodative to complement fiscal stimulus.

Risks

• Further disruptions in energy markets due to the Iran war
• Intensifying US-China tech competition leading to more blocked cross-border transactions
• Persistently weak domestic credit demand dragging down overall economic recovery
• RMB exchange rate volatility exceeding expectations

What to watch

• China's May trade, inflation, and credit data to be released this week
• Subsequent formulation of specific measures on cross-border investment by the State Council
• Sustainability of global AI capital expenditure
• Nationwide expansion of real estate policy easing