China’s Economic Outlook: Key Developments for 2025
As 2024 draws to a close, several key economic indicators and regulatory shifts are poised to shape China’s financial landscape in the new year.From upcoming PMI data releases to significant changes in investment regulations, the coming weeks promise considerable market activity.
PMI Data and Market Liquidity
The National Bureau of Statistics is set to release December’s Purchasing Managers’ Index (PMI) data on December 31st.November’s figures showed a manufacturing PMI of 50.3%, a slight uptick, while the non-manufacturing index dipped to 50.0%. The extensive PMI stood at 50.8%. This suggests a generally stable, albeit modestly expanding, economic climate.
Meanwhile, the central bank’s open market operations will see 580.1 billion yuan in reverse repos mature next week. Importantly,New Year’s Day falls on Wednesday,meaning all payments due that day will be delayed until after the holiday. The staggered maturity schedule—with varying amounts due each day—will be a factor to watch for market watchers.
Stock Market Shifts and New Listings
The A-share market is bracing for significant activity. Between December 30th and January 3rd, 2025, 63 listed companies will see their restricted shares unlocked, representing a total market value exceeding 33 billion yuan. Nine companies alone will see their unlocked shares surpass 1 billion yuan in market value, with several exceeding 2 or 3 billion yuan. This includes notable companies like Datang Telecom and Shanshan co., Ltd.
Adding to the market dynamism, two new companies—Saifen Technology, focused on liquid chromatography materials, and Junwei Electronics, specializing in precision resistors and fuses—will list their shares on December 30th.
Oil Prices and regulatory Overhauls
The first refined oil price adjustment of 2025 is scheduled for January 2nd, 2025, at midnight. 2024 saw twenty-five price adjustments, a mix of increases and decreases, resulting in a net decrease in gasoline and diesel prices compared to the end of last year. This adjustment will be closely watched for its impact on consumers and businesses.
The China Securities Regulatory Commission (CSRC) is implementing significant regulatory changes. New “Standard regulations for Calculation of Risk Control Indicators of Securities Companies,” effective January 1st, 2025, aim to optimize risk management and encourage long-term investment. The CSRC also revised the “Hong Kong Mutually Recognized Fund Management Regulations,” relaxing sales ratio limits and easing restrictions on investment management delegation, effective the same date.
Further incentivizing investor returns, the China Clearing Corporation Limited announced a 50% reduction in handling fees for A-share dividends in Shanghai and shenzhen, starting January 1st, 2025. This move is expected to encourage listed companies to distribute more dividends.
Global Market Update: New Year’s Day Closures and Key Economic Data Releases
As 2025 begins, global markets are bracing for a series of significant events, including New Year’s Day closures, key economic data releases, and impactful policy changes.These developments will undoubtedly shape the economic landscape in the coming weeks and months, with potential ramifications for the US economy.
New Year’s Day market Closures
January 1st,2025,will see major financial markets worldwide closed for New Year’s Day. This includes closures in Tokyo, Seoul, Germany, Italy, and a half-day session in France. The London Stock Exchange will close early, and the Sydney Stock Exchange will also close ahead of schedule. In the US, markets will be closed for the holiday. In Asia,night trading on several Chinese exchanges will be suspended on December 31st,with the Hong Kong stock Exchange observing a half-day trading session.
Upcoming Economic Data Releases
Next week will bring a flurry of crucial economic data releases. On December 30th, the US will release its Chicago PMI for December and the existing home sales index for November. Thursday, January 2nd, will see the release of several key indicators, including the final manufacturing PMI for the Eurozone and the UK, US initial jobless claims, the final US S&P Global Manufacturing PMI, and November’s US construction spending. on Friday, January 3rd, the US Energy Facts Administration (EIA) will release its weekly crude oil inventory data, along with the December ISM manufacturing PMI.
Significant Policy Changes
Several significant policy changes are set to take effect on January 1st,2025. the Office of the United States Trade Representative (USTR) announced new Section 301 tariffs on certain Chinese imports, including tungsten products and polysilicon.”china will take necessary measures to resolutely defend its rights and interests,” stated a spokesperson for the Ministry of Commerce. This action is expected to further escalate trade tensions between the US and China.
In China, a new version of the 2024 medical insurance drug catalog will be implemented, adding 91 new drugs and resulting in an estimated reduction of the patient burden by over 50 billion yuan in 2025. “Adding the factors of negotiated price reduction and medical insurance reimbursement, it is indeed expected to reduce the burden on patients by more than 50 billion yuan in 2025,” according to the National Medical Insurance Administration.
china’s new Energy Law, also effective January 1st, 2025, promotes exploration and advancement of various energy resources, including renewable and hydrogen energy.The law also emphasizes the development of key technologies in energy storage and conservation.
Geopolitical Developments
Geopolitically, the suspension of Russian natural gas transit through Ukraine, effective January 1st, 2025, is a significant development. While Ukraine’s Ministry of Foreign Affairs spokesperson, Tehi, confirmed a willingness to consider the European Commission’s requirements on energy supply, the transit halt will undoubtedly impact European energy markets.
china’s Economic Outlook: Key Developments for 2025
As 2024 draws to a close, several key economic indicators and regulatory shifts are poised to shape China’s financial landscape in the new year.From upcoming PMI data releases to meaningful changes in investment regulations, the coming weeks promise considerable market activity.
A Conversation with Dr. Lin Wei: Navigating China’s Economic Outlook
Introduction
Sarah Thompson, Senior Editor, world-today-news.com:
Welcome, Dr. Wei. Thanks for joining us today to discuss China’s economic outlook for 2025. There are a lot of moving parts as we head into the new year, so your insights are invaluable.
Dr. Lin Wei, Senior Economist, Peking University:
It’s a pleasure to be here, Sarah. There’s certainly a lot happening in China’s economy, and 2025 promises to be a dynamic year.
PMI Data and Market Liquidity
Sarah Thompson: Let’s start with China’s PMI data. What are your predictions for December’s figures?
Dr. Lin Wei: the November PMI data showed a slight uptick in the manufacturing sector, suggesting a stabilization, while the non-manufacturing sector held steady. I anticipate the December figures will reflect a continuation of this trend, with perhaps modest growth in both sectors.
Sarah Thompson: There’s also a lot of talk about the central bank’s open market operations and their potential impact on liquidity.
Dr. Lin Wei: Your right.
the staggered maturity schedule of reverse repos next week, coupled with the New Year’s Day holiday delay, will definitely be something to monitor closely.
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Stock market Shifts and New Listings
Sarah thompson: The stock market is facing a wave of unlocked shares and new listings. How significant is this likely to be?
Dr. lin Wei:
The market value of unlocked shares is substantial, and the listing of companies like Saifen Technology and Junwei Electronics will inject further dynamism.
Given the size of these offerings, we could see volatility in the short-term.
Oil Prices and Regulatory Overhauls
Sarah Thompson:
Turning to oil prices, what are your thoughts on the upcoming adjustment and its potential impact?
Dr. Lin Wei:
Predicting oil price movements is always tricky. However, given the recent trends and global supply dynamics, I wouldn’t be surprised to see a fairly modest adjustment on January 2nd.
Sarah Thompson:
Let’s discuss the regulatory changes from the China Securities Regulatory Commission. How will these impact the market?
Dr. Lin Wei:
These new regulations, notably those impacting risk management and facilitating long-term investment, are crucial signals.
They aim to create a more stable and predictable surroundings for investors.
Sarah Thompson:
The fee reductions for A-share dividends seem like a positive step. What are your thoughts?
Dr. Lin Wei:
absolutely. Lowering dividend handling fees should encourage more companies to distribute profits to shareholders,ultimately benefiting individual investors.
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Looking Ahead to a Dynamic Year
Sarah Thompson:
Dr.Wei, as we wrap up, what are the key factors investors should be watching in the coming months?
Dr. Lin Wei:
The interplay between PMI data, inflation trends, and the government’s policy responses will be crucial.
China’s economic trajectory in 2025 will heavily depend on these dynamics,so investors should stay informed and adaptable.
Sarah Thompson:
Thank you for sharing your valuable insights, Dr. Wei.
dr. Lin Wei:
My pleasure.
