IFF Newsletter | China's Push For Rural Reform, Revitalization

TIME：2025-02-28

From the Editor

China released a comprehensive policy blueprint for rural development on February 23, outlining a roadmap to strengthen agricultural capacity while emphasizing grain security and innovation.

The "No. 1 central document" for 2025, the first policy statement from central authorities this year, calls for intensified efforts in agriculture, rural areas, and farmer support, aiming at all-around rural revitalization and reinforcing the agricultural foundation.

After the University of Michigan's index decline, the Conference Board's index also dropped sharply. It fell from 105.3 in January to 98.3, the largest drop in over four years and well below the expected 103.

The 7 - point decrease is the steepest since 2021, with short - term expectations down 9.3 points, signaling recession risks. Concerns about a next - year recession hit a nine - month high. Meanwhile, the University of Michigan's index declined to 64.7 in February, its lowest in 15 months.

Newsletter

China News

China's New Push For Rural Reform, Revitalization

China unveiled a comprehensive policy blueprint for rural development on February 23, charting a detailed roadmap to build up the country's agricultural strength and emphasizing grain security, agricultural innovation and deepened reforms.

The "No. 1 central document" for 2025, the first policy statement released by China's central authorities this year, called for enhanced efforts in the work related to agriculture, rural areas and farmers in 2025 and beyond, with a target of advancing all-around rural revitalization and further consolidating the country's agricultural foundation.

With reform and opening-up, as well as scientific and technological innovation as the driving force, the country will safeguard the grain security and ensure that no large-scale lapsing or relapsing into poverty occurs, said the document.

The role of new quality productive forces in agriculture field was also emphasized in the "No. 1 central document" for 2025, which also called for the cultivation of leading high-tech agricultural enterprises and the acceleration of breakthroughs in crop varieties.

China's Tech Hub Shenzhen to Launch 10 Bln Yuan Fund to Accelerate AI Industry Growth

The south China tech hub of Shenzhen will launch a 10 billion yuan (about 1.39 billion U.S. dollars) industry fund to support the development of artificial intelligence (AI) and robotics, focusing on AI software, hardware and embodied intelligence, local authorities said on February 21.

The fund is part of the city's broader push to strengthen its position as a global hub for AI innovation.

City officials revealed the plan at a press conference, announcing an additional 4.5 billion yuan in funding to be raised this year. This funding will cover up to 60 percent of computing power costs for businesses, with a maximum of 10 million yuan per enterprise, provided through vouchers and subsidies.

Shanghai-Abu Dhabi Business Connect: Promoting Enterprise Exchanges and Cooperation

The Shanghai Federation of Industry and Commerce and the Abu Dhabi Chamber of Commerce and Industry jointly held the Abu Dhabi-Shanghai Business Connect meeting on February 19. The event aimed to deepen the economic and trade relations between the pair, establish a multi-level and regular cooperation mechanism, and promote exchanges and project ties between enterprises from both sites.

JuneYao Group, SenseTime Group, Pinduoduo, the Shanghai Humanoid Robot Innovation Incubator, and other Chinese companies shared their experiences with the Abu Dhabi delegation on aviation, artificial intelligence, and cross-border e-commerce, as well as their diversified development and innovative practices at the meeting.

A delegation of 140 government and business officials led by Ahmed Jasim Al Zaabi, chairman of the Abu Dhabi Department of Economic Development, is visiting Shanghai to strengthen alliances and explore new economic and trade cooperation opportunities with Chinese companies.

Net Interest Margins at Chinese Banks Hit New Record Low in Fourth Quarter

Net interest margins at China’s commercial banks sank to another all-time low in the fourth quarter of last year, while asset quality remained generally stable, according to data released by the National Financial Regulatory Administration on Feb. 21.

Net interest margin -- or the difference between the amount of money a bank earns on loans and the amount it pays on deposits -- averaged 1.52 percent in the three months ended Dec. 31. That was a drop of 1 basis point from the third quarter and 17 bps from a year earlier.

The balance of non-performing loans at commercial banks dropped by CNY97.7 billion to CNY3.3 trillion (USD13.5 billion to USD455.1 billion) last quarter from the previous three months, with the bad loan ratio falling to 1.5 percent from 1.55 percent. The capital adequacy ratio rose to 15.74 percent from 15.62 percent, while the tier 1 capital adequacy ratio climbed to 12.57 percent from 12.43 percent, the data showed.

China's Central Bank to Promote Cross-border RMB Use

The People's Bank of China (PBOC) will promote the use of renminbi (RMB) in cross-border payments, pricing, investment and financing, with an aim to facilitate international trade, investment and financing, according to a statement published on February 20.

The central bank said it would develop the offshore RMB market, leverage the roles of currency swaps and RMB clearing banks, and pledged to accelerate the construction of Shanghai's status as an international financial center and enhancing Hong Kong's status as an international financial center.

By the end of 2024, the RMB's share in global payments ranked fourth, while its share in global trade financing stood at third, indicating a steady rise in the internationalization of the RMB, according to data released at a conference held by the central bank from February 17 to 18.

China Issues Action Plan to Stabilize Foreign Investment in 2025

China on February 19 issued an action plan to stabilize foreign investment in 2025, which was approved by a recent State Council executive meeting.

The action plan was devised by the Ministry of Commerce and the National Development and Reform Commission, according to a notice issued by the General Office of the State Council.

Foreign investment is a key aspect of promoting high-standard opening-up, and plays a significant role in fostering new quality productive forces and advancing Chinese modernization, according to the action plan, which was formulated to ensure stable foreign investment in 2025.

Per the plan, China will support pilot regions in effectively implementing opening-up policies related to such areas as value-added telecommunication, biotechnology and wholly foreign-owned hospitals, providing whole-journey services for foreign-invested projects in these sectors.

Newsletter

International News

US House Passes Budget Resolution to Cut Taxes And Spending by Trillions

The US House of Representatives on February 25 narrowly passed a Republican budget resolution that calls for trillions of dollars in tax and spending cuts in federal spending over a decade, clearing the way for major elements of President Trump’s domestic agenda.

The resolution passed by 217 votes to 215 after a campaign by House Speaker Mike Johnson to push Republican holdouts to back Trump’s “big beautiful bill”.

The bill, which will kick off another round of budget talks in the Senate, proposes $4.5tn in tax cuts, about $2tn in spending cuts and allocating hundreds of billions of dollars more for the military and border security over a decade.

The bill instructs the House energy and commerce committee to slash $880bn in spending, a move widely seen as targeting the Medicaid health insurance programme for low-income Americans. Similarly, a call for the agriculture committee to reduce spending by $230bn is aimed at a food aid scheme called the Supplemental Nutrition Assistance Program.

According to the non-partisan Committee for a Responsible Federal Budget, the new measures would add at least $2.8tn to the deficit by 2034.

U.S. Consumer Confidence Plummets to Almost 4-Year New Low in February

Following a notable decline in the University of Michigan's Consumer Sentiment Index, the U.S. Conference Board's consumer confidence index also fell sharply in February, marking the largest monthly decline in over four years, according to the report released on February 27.

The index dropped to 98.3, down from 105.3 in January, significantly below economists' expectations of 103.

This seven-point decrease is the steepest since August 2021. The index measuring short-term expectations for income, business, and the job market fell 9.3 points to 72.9, indicating potential recession risks.

Concerns about a recession over the next year reached a nine-month high.

Additionally, the Consumer Sentiment Index released on February 21 by the University of Michigan (UM) Surveys of Consumers fell to 64.7 in the February 2025 survey, down from 71.7 in January and below last February's 76.9, and hitting the lowest level in 15 months.

S. Korea Cuts Policy Rate to 2.75 Pct on Dimmer Growth Outlook

Bank of Korea (BOK) Governor Rhee Chang-yong and other monetary policymakers on February 25 decided to lower the benchmark seven-day repurchase rate by 25 basis points to 2.75 percent. The decision was made by unanimous consent.

Four of the six monetary policymakers projected a rate freeze for the next three months, while the remaining two opened a possibility for an additional rate cut in the three-month period.

The BOK slashed the key rate by 25 basis points in October and November last year each, before putting it on hold in January this year.

This month's rate cut came after the gloomier growth forecast for the South Korean economy.The BOK revised down South Korea's growth outlook for 2025 by 0.4 percentage points to 1.5 percent, while forecast for 2026 was changed at 1.8 percent compared to three months earlier.

Over 85 Pct of Japanese Companies Plan Pay Raises: Survey

More than 85 percent of Japanese companies plan to increase wages in the coming fiscal year, according to a survey released on February 25 by Tokyo Shoko Research covering over 5,400 companies nationwide.

The survey found 92.8 percent of large corporations planned wage hikes, compared to 84.6 percent of small and medium-sized enterprises (SMEs).

Major reasons for raising wages included preventing employee turnover (78.0 percent), addressing rising living costs (71.7 percent), and attracting new hires (50.1 percent).

Large companies most commonly planned 5 percent raises, while SMEs typically aimed for 3 percent increases. SMEs not raising wages cited difficulties in managing rising operational costs.

Japan's Core Consumer Prices Rise 3.2 pct in January

Japan's core consumer prices rose 3.2 percent in January from a year earlier, the biggest gain in 19 months, amid higher rice and energy costs, government data showed on February 21.

The nationwide core consumer price index (CPI), which excludes volatile fresh food prices, stayed in the 3-percent range for the second straight month after having climbed 3.0 percent in December, according to the Ministry of Internal Affairs and Communications.

The inflation rate, a key indicator for the Bank of Japan (BOJ) in determining the timing of rate hikes, has remained at or above the central bank's 2 percent target since April 2022.

Core-core CPI, which strips away both fresh food and energy costs and is closely watched by the BOJ as a key gauge of broader inflation trends, was up 2.5 percent, accelerating from 2.4 percent in the previous month.

Australian Unemployment Rises to 4.1 Percent As Workforce Participation Hits Record High

Australia's unemployment rate rose slightly in January to 4.1 percent, from 4.0 percent in December, as the labor force participation rate hit a record high, showed official figures released on February 20.

The number of employed Australians increased by 44,000 between December and January to 14.63 million, while the number of unemployed people actively looking for work increased by 23,400 to 627,500, according to figures released by the Australian Bureau of Statistics (ABS).

As a result, the workforce participation rate -- the measure of the proportion of the working-age population who are either employed or looking for work -- increased from 67.2 percent to a new record high of 67.3 percent in January.

The employment-to-population rate also rose to a new record of 64.6 percent in January.