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#China commits to #economic reform to spur its economy upwards. #economics #finance #business #capital #wealth #money #banking #investments #currencies #markets #trade #manufacturing #industries #funds https://lnkd.in/grhksnSk

Talking China In this week’s Economic Letter from Asia, we focus on China, which has shown early signs of recovery following recent easing measures. While many view China’s latest local government debt swap program as a positive step, some remain underwhelmed by its scale, which falls short of estimates for the total amount of local government "hidden debt." We also examine broader structural issues that are likely to remain points of contention between China and other major economies, including China’s persistent current account surplus and concerns about its overcapacity. View the full commentary with charts here: https://lnkd.in/eDq_PnpX

An overview of the recent stimulus measures in the Chinese property market for those interested. What are the key policy features? What is the macroeconomic context behind this wave of support? Are there any potential challenges in implementing these policies? And, most importantly, what can we anticipate in the near term? #China #Property

📣 Uncertainty Is the Easy Part The policy decisions of a new US administration could potentially impact the global economy in a number of ways with key areas that might be affected including trade and tariffs, geopolitical stability, fiscal policy, deregulation, and immigration policy. In our charts this week we focus on: ⚡️Global equity market responses ⚡️Economic policy uncertainty ⚡️The consensus for policy rates ⚡️Oil prices and yields ⚡️China’s economy ⚡️Japan’s politics Access the full commentary and charts here: https://lnkd.in/gHZcwp_b

While it is certainly the right topic to be exploring, the angles of analysis need to be broadened to glean better insight, and use of Plaza Accord as an analogue is a significant miss. Firstly, Trump's invitation was purely signal, with no expectation for Xi to attend. It should not be analysed on traditional comparisons, as everything about a Trump presidency is breaking with historical norms. Its real objective is to set an early summit date to usher in the new era. Bessent's comments are most relevant, as a financial architecture amendment to match the global economic reordering that has already occurred would be helpful. However, it is not a Plaza Accord redux, as China's economic and geopolitical position are completely different. In 1985, Japan's economy was strong on all components, and the first significant rise in household wealth was driving both traded goods & asset price inflation. It was in a position to absorb a deflationary shock from currency realignment. Furthermore, Japan was under the US security umbrella and Washington was keen to invite Japan into the G7 inner circle. Reagan-Nakasone relationship, like that of Reagan-Thatcher, was a bridge of trust that facilitated grand strategy shifts. China, on the other hand, is not part of the US-Europe-Japan leadership dynamic. Trump could invite China to join an expanded G8, as Clinton did in the 90s with a post-Soviet Russia, but China, like Russia then, would never feel part of the team. There is no basis of trust there. The demands for currency appreciation will also not happen while China is battling deflation and capital flight. At best, Xi could pledge to hold the RMB steady, as it did during the Asian Financial Crisis. Holding the Yuan steady is what the PBOC is doing now. If not for the artificial fixes, USDCNY would be much higher. China doesn't need a weaker currency for export competitiveness, as it is willing to sacrifice profit margins for export volumes, and keeping a steady Yuan matches the confidence narrative it tries to promote, making stability an easy pledge to offer. But it would seem Bessent is hinting at something grander. If one works from the basic Trump premise, which is a lack of faith/trust in international institutions, the grand arrangement could target greater burden sharing, and by implication - a greater leadership role for China in these organisation. The IMF, World Bank, ADB, even BIS & FSB could also be open to expanded China leadership. Trump would view this loss of US leadership control an area he's happy to concede, much like the reduced US NATO commitment, where the burden no longer seems to match the benefits accruing to the US. What would the US want in exchange? More than likely the US would seek China enforcement of western sanctions against Russia. Driving a wedge between China and Russia will be a pillar of the Trump Admin's strategy to end the Russia-Ukraine war. #trump #xi #uschinarelations #geopolitics

As global markets respond to the latest political developments and economic shifts, our latest article breaks down the impact of the 2024 US Presidential Election on the DXY Index, China’s economic outlook, and how APAC markets are responding. Read the full article here: https://bit.ly/48jTQCK #FXPolling #FXMarkets #GlobalFinance

Dear Partners and Friends, I am happy to share our first bi-weekly macro monitor of the year. The report highlights two key themes: 1) U.S. Policies and Economic Dynamics: Trump's tariffs and deportation plans are expected to strain the labor market, raise inflation, and cause a bear steepening of the yield curve, with a significant impact on the dollar. 2) China's Economic Struggles: Persistent deflation, overcapacity, and weak domestic demand undermine growth, with monetary policy measures proving ineffective; currency depreciation and structural rebalancing are critical to addressing these challenges. Regards, Andre Chelhot, CFA Prague Finance Institute Zelof & Partners LLP #yieldcurve #inflation #deflation #dollar #yuan

Today marks the start of the Central Economic Work Conference, a closed-door meeting that typically lasts a couple of days, where the #Chinese #Politburo, policymakers and others gather to outline the economic policy for the coming year. You might have read this already: A note from the Chinese Politburo recently announced a shift in monetary policy to "𝗺𝗼𝗱𝗲𝗿𝗮𝘁𝗲𝗹𝘆 𝗹𝗼𝗼𝘀𝗲." The note also stated that in 2025, "more proactive and impactful macro policies should be adopted." 𝗪𝗵𝗮𝘁 𝘁𝗵𝗲𝘀𝗲 𝗽𝗼𝗹𝗶𝗰𝗶𝗲𝘀 𝘄𝗶𝗹𝗹 𝗲𝗻𝘁𝗮𝗶𝗹 will likely be a key focus of this meeting. Economists are hoping for 𝗯𝗼𝗹𝗱𝗲𝗿 solutions. The hidden-debt restructuring policy announced in November, while appreciated, hasn’t been enough to restore consumer confidence. The easiest way to support domestic consumption, though not without risks, would be to hand checks directly to consumers. Yet, this approach has never been seriously considered in China. The reason would need a post in itself, but it boils down to a different perspective on what constitutes successful national development, coupled with ideological resistance to such policy. But with exports continuing to decline, a clear deflationary trend continuing, and Trump-era tariffs looming on the horizon, perhaps we are entering extraordinary times. Will the call for extraordinary solutions be answered?

Latest Economic Letter from Asia: Talking Trump This week’s letter examines the impact of President-elect Trump’s victory on Asia. His policies could limit Asian central banks’ ability to ease monetary policy if they fuel inflation and prompt tighter-for-longer US rates. Proposed tariffs on China and other countries pose risks of trade disruptions and retaliatory actions. These policies might also lead to shifts in business strategies, with companies reconsidering global supply chains, accelerating reshoring, or reducing investments abroad. Read the full release and view the charts here: https://lnkd.in/eDq_PnpX