Yao Li’s Post

Sharing my thoughts on market: The global economic landscape in 2025 is characterized by divergent monetary policies, with most countries entering an easing cycle except for Japan, Australia, Brazil, and Russia. The U.S. Federal Reserve projects a higher terminal rate of 3.88-4.12% for 2025, influenced by potential Trump policies including increased tariffs and immigration restrictions. Europe faces multiple challenges requiring faster rate cuts, while China continues to implement economic stimulus measures to prevent further decline. The possibility of Trump's 60% tariff on China could impact Chinese exports by 12-15% and slower economic growth by 0.9-1.1%. The tech sector continues to dominate the U.S. stock market, with AI driving significant changes and creating unprecedented demand for semiconductors and infrastructure. The CHIPS Act has spurred over $450 billion in private investments, though challenges remain including worker shortages and cybersecurity concerns. In fixed income markets, high-yield bonds have shown resilience, particularly in the U.S. and Asia, while the local Indonesian market faces mounting pressures from fiscal deficits, rising debt, and external vulnerabilities, requiring structural reforms to maintain stability and investor confidence. Read more -> https://lnkd.in/enq424yK

Again, the primary root source of the data and graphics are the China Pathfinder Report, previously cited. Where Does China's Economy Stand? As noted in the preface of their most recent update, they state that "China is a global economic powerhouse, but its system remains opaque. Policymakers and financial experts disagree on basic facts about what is happening inside the country. To create a shared language for understanding the Chinese economy, the China Pathfinder project scores China and other open market economies across six key areas and presents an objective picture of China relative to the world." China Pathfinder: Q2 2024 update The gulf between economic data and official pronouncements grew through the second quarter of 2024. Property markets, stock prices and consumer sentiment all indicated weakness while China showcased engagement with foreign investors and private Chinese firms to signal intent to boost activity. But new policy actions were not market friendly in the period before the July 2024 Third Plenum economic planning meetings. There were a few encouraging signs for foreign investors, including pledges to discipline local protectionism and arbitrary regulations, but these have been heard before, and “promise fatigue” is a serious problem. Most of the clusters we track showed limited progress or further divergence from OECD norms. On trade, China refused to acknowledge the legitimacy of the overcapacity concerns the world was alarmed about. The second quarter generally reflected the takeaway from the July plenum meetings: China will leverage whatever it can to drive technological advancement, and national security will override efficiency at home and engagement abroad. New rules to address excess local regulation contain expansive national security carveouts, as do pilot measures to allow foreign investment in data centers and telecom. Beijing’s commitment to direct state support to vast swaths of the economy was reinforced this quarter, with the state planning plenum manifesto as a capstone. Selected text is © The China Pathfinder Report, 2024. All Rights Reserved. Graphic is © Mark S. Mandula, CLO BCR Learning, 2024. All Rights Reserved.

With the unprecedented uncertainties the global economy faces in 2024, China's financial sector stands at a critical point. At the 2024 China and Global Economic Forum, experts gathered to discuss the complex challenges, from stock market reforms to sustainable economic growth. As digital technology and AI create new opportunities, fostering transparency, rule of law, and trust within financial systems is essential for China to strengthen its role in the global economy and build towards a financial powerhouse by 2035. Full article: https://lnkd.in/eW-dv89f

China’s government work report this week signalled robust support for the new economy going forward, aligning with the messaging coming out of the Central Economic Work Conference late last year. Policy stimulus signals, while still supportive, remained moderate overall, consistent with our expectations going into the two sessions. Our text-based quantitative analysis filters out key themes of the report and examines their implications. We've made this note available for free for a limited time. Happy reading! #china #twosessions #npc #workreport #neweconomy #artificialintelligence #stimulus #macroeconomy #assetmanagement #investing #research #textanalytics https://lnkd.in/gpVbXAuv

In Q2, the gap between China’s official economic narrative and the reality on the ground widened. Despite claims of robust growth, key indicators like property markets, stock prices, and consumer sentiment paint a different picture. While there were some pledges to attract foreign investment, skepticism and ‘promise fatigue’ remain significant challenges. The Atlantic Council GeoEconomics Center’s latest report, in collaboration with the Rhodium Group, dives into these developments and analyzes the policy shifts leading up to the Third Plenum. Discover how China’s focus on technological advancement and national security is shaping its economic landscape—and what it means for global markets. 🔗 Read the full report here and explore our detailed analysis:

🚨 Times are changing 🚨 What is the future of free-market policies? — More and more countries are embracing policies meant to foster their home security, independence and development. Many world leaders and economists fear that this phenomenon will eventually hurt global economic growth. Top-down economic intervention from rich countries' governments are popular measures internally in the countries, but worrying for international growth. Will we see a damage in free-market dynamics? Possibly, it comes down to the World Bank and the IMF to take action regarding this issue. — The faith in free-market policies has been shaken up by the events of the last couple years, the pandemic, supply chain meltdowns, soaring inflation and interest rates, Russia’s invasion of Ukraine, rising tensions between the United States and China, Middle East conflicts, etc. Should governments control their economies or keep faith in free-market policies? I would say this question is still open for debate. Good read ! #IMF #WorldBank #market #economy #US #China

There's a lot in this FT article about the relative stagnation of the European economy vis-a-vis the US and China. As the article points out, these European failures are not mono-causal. But this quote stood out to me: "Isabel Schnabel, an [European Central Bank] executive, says the Eurozone has lost about 20 per cent of productivity relative to the US since the mid-1990s, attributing this to the continent’s 'failure to reap the benefits of digital technology developments' such as cloud computing and software applications. 'It is not that this technological knowledge is not distributed across countries, but it is only a very small share of firms within countries that make efficient use of it'' she says. Schnabel adds that many European companies are too small and constrained by regulation to fully exploit new technology. Companies with more than 250 employees account for almost 60 per cent of private sector jobs in the US, but in the EU this falls to between 12 per cent in Greece and 37 per cent in Germany. 'Larger firms invest more and are more productive,' she says." Ironically, this article came out on the same day that the European Union designated its first European gatekeeper under the Digital Markets Act (the other "gatekeepers" are all American (Microsoft, Alphabet, Meta, Amazon, and Apple) or Chinese (Bytedance (aka TikTok's parent)). One way to look at this is that Europe has been running what economists call a "natural experiment" to show what their brand of economic regulation can accomplish. It will be interesting to see if other growing economies choose to follow their underperforming example. #dma #digitalmarketsact

Great piece from my colleagues of our Global Advantage team on stratgegic autonomy. Major geopolitical forces are reshaping global markets into the 2030s: rising trade volume within North America, continuing tensions between China and the West, growth of the ASEAN bloc and India, and further trade divergence from Russia. The EU will feel the effects of these forces even more than the rest of the world, as it finds new sources of energy imports, absorbs the impact of values-based trade policy, develops new trade relationships in emerging markets, and navigates its partnerships with China. BCG’s Nikolaus Lang, Mark Gilbert, Johan Öberg, Emil Stamp, Mikko Tynkkynen, and Tim Figures discuss the EU’s specific challenges and recommend strategies for adaptation in a new article, “Toward Open Strategic Autonomy: How European Leaders Should Adapt to an Increasingly Uncertain World.” Read it here. https://lnkd.in/dcsQfk8P #globaltrade #strategy #uncertainty #EU

Following the conclusion of China’s Third Plenum, China has released a 60-point policy document outlining known ambitions, from developing advanced industries to improving the business environment. The plenum reasserted China’s quest for “new productive forces” as it set out to promote revolutionary breakthroughs in technology, innovative allocation of production factors, and in-depth industrial transformation and upgrading. The document also reiterated that markets will play a decisive role in resource allocation, that the government will work on legislation to improve conditions for the private sector, and flagged fiscal and financial reforms. As policymakers lay out strategic directions, First Plus is assessing how these policies could influence global and regional markets and the potential opportunities it presents. Reach out to us and stay informed on how these developments could shape your investment strategies! Continue reading: https://lnkd.in/e92xrNcy #FirstPlus #UnlockingOpportunities #ChinaEconomy #ChinaMarket