Fitch Ratings changed its 2025 outlooks on China's life insurers and residential mortgage-backed securities (RMBS) to deteriorating from neutral, according to a Thursday release.

The rating agency now has eight Chinese sector and asset performance outlooks as deteriorating, reflecting financial headwinds amid increased US tariffs, a persistent property market slowdown, and continued deflation, Fitch said.

Other sectors with deteriorating outlooks include engineering and construction, homebuilders, real estate, banks, greater China sovereigns, and asset-backed securities.

Meanwhile, those with neutral outlooks include nonlife insurers, nonbank financial institutions, local and regional governments, and local government financing vehicles.

Fitch expects China to face rising challenges in the second half of 2025 from weaker exports due to the 40% US effective tax rate on imports.

The Chinese government will continue to carry out stimulus to anchor growth given present headwinds, which would adversely impact public finances, Fitch said.