China

China's factory activity likely contracted for a second month in February, keeping alive calls for even more stimulus to prop up depressed domestic demand in the world's second-largest economy as manufacturers brace for fresh U.S. tariffs, Reuters reported. A Reuters poll of 21 economists forecast the official purchasing managers' index (PMI) will come in at 49.9, up from January's 49.1 but still below the 50-point threshold that separates growth from contraction in activity.

China's banks are cutting the interest rates offered on U.S. dollar deposits after being asked to do so by the central bank, possibly to curtail dollar hoarding and also prop up a weakening yuan, Reuters reported. Mainland retail investors and exporters have built up nearly a trillion dollars worth of deposits because of higher U.S. yields and the yuan's slide. Two banking sources with direct knowledge of the matter said that banks across China, big and small, have over the past few weeks been told by the People's Bank of China (PBOC) they have to cut dollar deposit rates.

Distressed Chinese developer Yuzhou Group (1628) needs financing to press ahead with an offshore restructuring plan that received court approval last year, Bloomberg News reported. The builder will use the next six months to “shore up its liquidity in advance of making the payments due on the restructuring effective date,” Christopher Hunker, a counsel at Linklaters on behalf of Yuzhou, said during a Tuesday bankruptcy court hearing in New York. Financing difficulties have led to delays implementing the plan, the company said earlier this month in an exchange filing.

Some large hedge funds and investors are accumulating long-shunned China property stocks at low prices, anticipating lucrative returns when the sector recovers from its prolonged crisis, Reuters reported. Investors said recent positive signs, from improving home prices in top cities to industry leader China Vanke's recapitalization plan, suggest this year will be the turning point for the real estate market. To be sure, they are selective and have set their sights on leading state-backed homebuilders and China's largest online property brokerage.

President Donald Trump says he plans to impose tariffs on Canada and Mexico starting next Tuesday, in addition to doubling the 10% universal tariff charged on imports from China, Reuters reported. Posting on Truth Social on Thursday, Trump said that illicit drugs such as fentanyl are being smuggled into the United States at “unacceptable levels" and that import taxes would force other countries to crackdown on the trafficking.

China needs to vastly step up its efforts to cleanse the balance sheets of the nation’s local governments, giving them the space needed to support consumer spending and strengthen the economy, one of the nation’s most prominent economists said, Bloomberg News reported. The central government should take on at least 20 trillion yuan ($2.8 trillion) worth of local sovereign debt, David Li Daokui, an economics professor at Tsinghua University and a regular adviser on policy to Beijing, said in an interview.

China local governments are rushing to issue bonds to refinance hidden debt, further tightening liquidity in the financial system, Bloomberg News reported. Regional authorities are set to sell 1.7 trillion yuan (S$313 billion) of bonds in the first two months of 2025, an unprecedented amount for the period, data compiled by Bloomberg show. About half of the issuance, or 850 billion yuan, is to replace off-balance sheet debt, according to the data. The unusually big offering has exacerbated a cash squeeze this year, as banks rush to absorb the securities.

China’s distressed developers are increasingly asking local courts to drive their restructuring efforts, as weak home sales continue to weaken their ability to make headway or deliver on private debt workout plans, Bloomberg News reported. Chongqing Casin Property Development Group late last month became the newest among its peers to apply for the court to overhaul its debt. The move followed a Bloomberg News’ report that defaulter China Fortune Land Development is considering scrapping a creditor-approved debt plan for a court-led solution.

Chinese companies, mainly those in the tech sector, are accelerating plans to raise funds offshore, tapping into a rebound in investor sentiment fueled by hopes of Beijing's support for private firms and the popularity of DeepSeek, bankers said, Reuters reported. In a sign of the pickup in offshore equity sale momentum, two tech companies raised $500 million in total this week alone, and bankers and lawyers said a growing list of firms is preparing to launch offshore equity sales in the coming months.