China

Chinese leaders agreed last week to raise the budget deficit to 4% of gross domestic product (GDP) next year, its highest on record, while maintaining an economic growth target of around 5%, two sources with knowledge of the matter said. The new deficit plan compares with an initial target of 3% of GDP for 2024, and is in line with a "more proactive" fiscal policy outlined by leading officials after December's Politburo meeting and last week's Central Economic Work Conference (CEWC), where the targets were agreed but not officially announced.

China's industrial output rose 5.4% from a year earlier in November, quickening from October's 5.3% growth, signalling tentative stabilisation in the world's second-largest economy as recent stimulus measures start to gain traction, Reuters reported. Data released on Monday by the National Bureau of Statistics beat expectations for a 5.3% rise in a Reuters poll of 26 analysts. Retail sales, a gauge of consumption, grew 3.0% in November, down from a 4.8% rise in October. Analysts had predicted a 4.6% expansion.

China's home prices fell at the slowest pace in 17 months in November, with the crisis-hit property market showing signs of stabilising in some major cities amid government efforts to revive the real estate sector, Reuters reported. New home prices were down 0.1% in November from a month earlier, the slowest decline since June last year, according to Reuters calculations based on National Bureau of Statistics data on Monday. Prices dropped 0.5% in October from a month earlier. In annual terms, new home prices fell 5.7% after a 5.9% drop the previous month.

Chinese leaders met this week to plot economic policy for the coming year, sketching out plans to raise government spending and relax Beijing’s monetary policy to encourage more investment and consumer spending, the Associated Press reported. Leaders of the ruling Communist Party wrapped up their two-day Central Economic Work Conference on Thursday with praise for President Xi Jinping's guidance and a pledge to “enrich and refine the policy toolbox” and defuse risks facing the world's second-largest economy.

China’s top leaders on Thursday pledged more stimulus measures to shore up the country’s economy, building on steps they have taken in recent months to bolster growth, the New York Times reported. At an annual gathering of the Chinese Communist Party and the cabinet, led by the country’s top leader, Xi Jinping, officials agreed that the government should allow a bigger budget deficit, borrow more and cut interest rates, the state television broadcaster said on Thursday.

China is poised to roll out an expansion of its nationwide private pension system as the world’s second-largest economy faces a rapidly aging population and its public pension fund is running dry, the Wall Street Journal reported. Workers covered by the nation’s basic pension insurance system can voluntarily open private pension accounts and deposit up to 12,000 yuan, equivalent to about $1,650, a year into the accounts, five governing bodies, including the Ministry of Human Resources and Social Security, said in a joint statement yesterday.

China's top leaders and policymakers are considering allowing the yuan to weaken in 2025 as they brace for higher U.S. trade tariffs as Donald Trump returns to the White House, Reuters reported. The contemplated move reflects China's recognition that it needs bigger economic stimulus to combat Trump's threats of punitive trade measures. Trump has said that he plans to impose a 10% universal import tariff, and a 60% tariff on Chinese imports into the United States.

Europe’s bid to build a homegrown battery industry to break China’s dominance in electric vehicles is failing, Bloomberg News reported. The most high-profile setback yet came with the Chapter 11 bankruptcy of Northvolt AB, a Swedish startup whose backers include Volkswagen AG and BMW AG. Fallout is spreading across the region as EV demand wanes and local manufacturers struggle to master the technology. Eleven out of 16 planned European-led battery factories have been delayed or canceled, according to a Bloomberg News analysis.

China's exports slowed sharply and imports unexpectedly shrank in November, in a worrying sign for the world's No. 2 economy as Donald Trump's imminent return to the White House brings fresh trade risks, Reuters reported. The disappointing trade figures follow other indicators showing patchy growth in November, suggesting Beijing needs to do more to shore up a faltering economy that is only likely to face further challenges next year. Outbound shipments grew 6.7% last month, customs data showed on Tuesday, missing a forecast 8.5% increase and down from a 12.7% rise in October.

The Chinese government plans to transfer ownership in one of the nation’s biggest bad-debt managers to a unit of its sovereign wealth fund in coming weeks as part of a regulatory overhaul, Bloomberg News reported. The Ministry of Finance is currently going through the process to move its holdings in China Cinda Asset Management Co. to Central Huijin Investment Ltd. The plan is in its final stage but may still change or get delayed.