IFF Newsletter | China's Economy Starts Positively in 2025

TIME：2025-03-20

From the Editor

The Chinese economy has maintained good growth momentum, starting the year on a steady note with sound industrial performances and impactful macro policies, official data revealed on March 17.

During January and February 2025, most key indicators saw solid increases, and new quality productive forces continued to grow, according to the National Bureau of Statistics (NBS).

The Bank of Japan maintained its benchmark rate at 0.5% on March 19, expressing concerns over uncertain global trade conditions and their effects on Japan's economy. The central bank had previously raised rates from 0.25% at its January meeting.

BOJ Governor Kazuo Uedahighlighted the importance of closely watching U.S. trade policy implications for both global and domestic markets. He acknowledged progress toward the 2% inflation target and robust wage growth, while cautioning about ongoing economic uncertainties.

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China News

72% of Chinese CEOs Are Bullish on Business Growth in Next Three Years, PwC Says

Seventy-two percent of chief executive officers at Chinese companies said they are optimistic about their business growth prospects over the next three years, according to a survey released on March 18 by UK accountants PricewaterhouseCoopers.

The figure is much higher than the global average of 53 percent, PwC’s 28th Annual Global CEO Survey China Report showed.

Chinese CEOs remain highly confident in their business growth prospects, despite sharing concerns over economic swings and inflation with their global counterparts and displaying heightened sensitivity to geopolitical tensions and supply chain disruptions, the report said.

China's Digital Industry Reports Revenue, Profit Growth in 2024

China's digital industry operated steadily in 2024, with increases in both revenue and profits, data from the Ministry of Industry and Information Technology (MIIT) showed on March 17.

The industry's business revenue reached 35 trillion yuan (about 4.9 trillion U.S. dollars) last year, a 5.5 percent year-on-year increase. Total profits grew 3.5 percent year on year to 2.7 trillion yuan, according to the MIIT.

Notably, the added value of major manufacturers of computers, communication devices and other electronic devices grew 11.8 percent, up 8.4 percentage points from the previous year.

Boosted by artificial intelligence (AI), cloud platforms and other emerging business activities, the country's software sector recorded 10 percent growth in business revenue, which reached 13.7 trillion yuan.

China’s Economy Gets Off to Positive Start in 2025

China's economy showed positive momentum in the first two months of the year, with industrial production, consumer spending, and fixed asset investment each rising more quickly than a year ago, laying a solid foundation for achieving this year’s 5 percent growth target, according to the official data released on March 17.

The value added of industrial enterprises with annual revenue of at least CNY20 million (USD2.8 million) widened 5.9 percent in January and February from a year earlier, compared with a 5.8 percent increase for the whole last year, the National Bureau of Statistics announced.

China’s retail sales of consumer goods rose 4 percent to CNY8.37 trillion (USD1.16 trillion) in the two months ended Feb. 28 from a year earlier, 0.5 percentage point faster than in the whole last year.

China’s investment in fixed assets, excluding rural households, climbed 4.1 percent to CNY5.26 trillion in the first two months of the year from the same period last year, compared with a 3.2 percent growth in 2024, according to the NBS. Infrastructure and manufacturing investment rose 5.6 percent and 9 percent, respectively, according to the NBS.

China Records Net Inflow of Cross-border Capital in February

China's foreign exchange market operated steadily in February, with a net inflow of cross-border capital, data from the State Administration of Foreign Exchange showed on March 17.

Last month, the net inflow of cross-border capital from the trade of goods reached 64.8 billion U.S. dollars, remaining relatively high compared to the same period in previous years, said Li Bin, deputy head of the administration.

Additionally, foreign holdings of domestic bonds and stocks increased by a net total of 12.7 billion dollars, according to Li.

Looking ahead, he said the foreign exchange market will continue to operate on a stable trajectory, thanks to the country's proactive macroeconomic measures to boost consumption and investment, its commitment to high-level opening up, and the market's increasing resilience.

China Sets Out Plan to ‘Vigorously Boost’ Consumption

The Chinese government unveiled a plan on March 16 to “vigorously boost” domestic consumption and expand demand by introducing measures to lift incomes and beef up social security, among other initiatives.

China will promote reasonable wage growth by strengthening employment support in line with current economic conditions and by raising the minimum wage, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council wrote in a document issued.

The new consumption plan also calls for expanding property income channels through measures aimed at stabilizing the stock market and developing more bond products suitable for individual investors. It further proposes exploring ways to unlock the value of houses owned by farmers through rental arrangements, equity participation, and cooperative models.

The 30-point package also seeks to ease the economic burden on households in areas such as childbirth, elderly care, and healthcare through childcare subsidies, more educational resources, increased fiscal subsidies for basic state pensions and basic medical insurance, as well as bigger pensions.

China Issues 6.14 Trillion Yuan in New Loans in First Two Months of 2025

China issued 6.14 trillion yuan (about 855.89 billion U.S. dollars) in new yuan-denominated loans in the first two months of 2025, central bank data showed on March 14.

At the end of February, outstanding yuan loans amounted to 261.78 trillion yuan, up 7.3 percent year on year, according to the People's Bank of China.

The M2, a broad measure of money supply that covers cash in circulation and all deposits, had by the end of last month increased by 7 percent year on year to 320.52 trillion yuan.

The M1, which covers cash in circulation, demand deposits and clients' reserves of non-banking payment institutions, stood at 109.44 trillion yuan at the end of February, up 0.1 percent year on year.

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International News

BOJ Maintains Policy Rate at 0.5% Amid Trade Policy Concerns

The Bank of Japan kept its policy rate unchanged at 0.5% on March 19, citing uncertainties surrounding global trade policies and their potential impact on the domestic economy. The decision follows January's rate hike from 0.25%.

In a press conference, BOJ Governor Kazuo Ueda emphasized the need to monitor the effects of U.S. trade policies on global and Japanese markets. While noting that underlying inflation is gradually approaching the 2% target and wage trends remain strong, Ueda stressed that significant uncertainties persist.

The central bank indicated it would maintain a cautious stance toward future rate increases, including a potential hike to 0.75% - which would mark the highest level in three decades. The BOJ expressed readiness to adjust monetary easing measures as needed, based on economic and price outlook developments.

Retail Sales Stumble, Consumer Confidence Falters in US

U.S. retail sales rose just 0.2 percent in February after falling 1.2 percent in January, the Commerce Department reported on March 17. The modest gain to USD722.7 billion fell short of economists' expectations, though sales remained 3.1 percent higher than a year ago.

The lackluster retail data came as consumer sentiment dropped for a third straight month, plunging 10.5 percent to 57.9 in March, according to the University of Michigan survey released on March 14. The index now sits 27.1 percent below year-ago levels.

While current conditions held steady, consumers expressed growing pessimism about future personal finances and economic prospects, with policy uncertainty weighing on financial planning decisions.

Global GDP Growth Projected to Slow Down to 3.1 pct in 2025, 3 pct in 2026 - OECD

Global GDP growth is projected to moderate from 3.2 percent in 2024 to 3.1 percent in 2025 and 3 percent in 2026, the Organization for Economic Cooperation and Development (OECD) said on March 17 in its latest Economic Outlook.

The downward revision from its previous forecast reflects "higher trade barriers in several G20 economies and increased geopolitical and policy uncertainty weighing on investment and household spending," the OECD noted.

The organization warned that further increases in trade barriers would dampen global growth and contribute to inflationary pressures. In its December 2024 forecast, the OECD had projected global GDP growth at 3.3 percent for both 2025 and 2026.

Inflation is expected to remain higher than previously anticipated, though still moderating as economic growth softens. In G20 economies, headline inflation is projected to decline from 3.8 percent in 2025 to 3.2 percent in 2026.

Core inflation in more than half of the advanced G20 economies, including the United States, is projected to remain above central bank targets in 2025 and 2026.

Global Trade Hits Record 33 Trillion USD in 2024 - UN Report

Global trade hit a record 33 trillion U.S. dollars in 2024, marking a 3.7 percent increase from 2023, according to the latest Global Trade Update on March 14 by the United Nations Trade and Development (UNCTAD).

The growth was driven by services, which rose 9 percent and accounted for nearly 60 percent of the total growth, while trade in goods grew 2 percent.

Developing economies outpaced developed nations in 2024, with imports and exports rising 4 percent for the year. Meanwhile, developed economies' trade stagnated, with imports and exports flat for the year and down 2 percent in the last quarter.

The report highlights mounting geoeconomic tensions and trade disputes that could disrupt trade ahead, despite signs of trade stability in early 2025.

Global oil demand forecasts unchanged for 2025, 2026 - OPEC

The Organization of the Petroleum Exporting Countries (OPEC) announced on March 13 that its previous forecasts for global oil demand growth in 2025 and 2026 remain unchanged.

In its monthly oil market report, OPEC projects an increase in global oil demand. It estimates a rise of 1.45 million barrels per day (bpd) in 2025 and a robust growth of 1.43 million bpd in 2026, both unchanged from last month's assessment.

Canada Initiates WTO Complaint Regarding US Steel, Aluminum Tariffs

The World Trade Organization (WTO) said on March 13 that Canada has requested WTO dispute consultations with the United States regarding the tariffs imposed by the U.S. on certain steel and aluminum products from Canada.

Canada claims that the measures, which terminate Canada's exemption from additional tariffs on certain steel and aluminum products and increase tariffs on aluminum articles, are inconsistent with U.S. obligations under the General Agreement on Tariffs and Trade (GATT) 1994, the WTO said in a statement.

On Feb. 10, U.S. President Donald Trump signed proclamations to raise tariffs on aluminum from 10 percent to 25 percent, aligning them with the existing tariff rate for steel. He also decided to eliminate duty-free quotas, exemptions, and exclusions for steel and aluminum tariffs. These measures were set to take effect on March 12.