January 15 Macroeconomic Index:Domestic policies support economic recovery and innovation, while international financial markets face multiple challenges

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International Crude Price Trend & Exchange Rate of RMB to USD Trend

Domestic News

1. The People's Bank of China will implement a moderately loose monetary policy in 2025

2. The Ministry of Industry and Information Technology held the eighth roundtable meeting of small and medium-sized enterprises

3. Xi Jinping had a telephone conversation with the President of the European Council

4. Ministry of Natural Resources: China has made a major breakthroughs in the exploration of ultra-deepwater and ultra-shallow gas

5. Xuan Changneng, Deputy Governor of the People's Bank of China: This year will further reduce the overall cost of liabilities of banks and ease the pressure on banks' net interest margins

 International News

1. The US PPI data for December rose only modestly, and the increase was less than expected

2. International Labour Organization: Global economic growth slows and labor market recovery is difficult

3. Economists: The probability of a rate hike by the Bank of Japan has increased, and the yield of Japanese bonds has risen

4. Russia's largest shipping company: New US sanctions have caused operational difficulties

5. UBS: Mixed economic signals: The Reserve Bank of Australia is not expected to rush to cut interest rates in February

Domestic News

1. The People's Bank of China will implement a moderately loose monetary policy in 2025

Xuan Changneng, Deputy Governor of the People's Bank of China, said at a series of press conferences on "China's high-quality economic development results" held by the State Council New Office on January 14 that the People's Bank of China will implement a moderately loose monetary policy in 2025, and adjust and optimize the intensity and rhythm of policies according to the domestic and foreign economic and financial situation and the operation of the financial market. We will make comprehensive use of various monetary policy tools such as interest rates and reserve requirement ratios to maintain abundant liquidity and ensure a loose social financing environment. Strengthen the implementation of interest rate policies, and further reduce the cost of comprehensive social financing on the basis of maintaining the healthy operation of the financial industry. Scientifically use structural monetary policy tools, and give full play to the dual functions of monetary policy tools in terms of total volume and structure. We will continue to take comprehensive measures to maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.

2. The Ministry of Industry and Information Technology held the eighth roundtable meeting of small and medium-sized enterprises

On January 14, Xin Guobin, Member of the Party Leadership Group and Vice Minister of the Ministry of Industry and Information Technology, presided over the eighth round table meeting of small and medium-sized enterprises. The meeting emphasized that small and medium-sized enterprises were an important force to promote innovation, promote employment and improve people's livelihood. It was hoped that all entrepreneurs would strengthen their confidence, firmly establish the feelings of the family and the country, actively integrate the development of enterprises into the national strategy, give full play to the leading role of leading and backbone enterprises, promote the collaborative innovation of upstream and downstream enterprises in the cluster, establish a new platform for the transformation of scientific research achievements with universities and scientific research institutions, and promote the integrated development of scientific and technological innovation and industrial innovation. It was necessary to strengthen the collaboration and sharing among cluster enterprises, explore the construction of shared factories, shared workshops, small-scale pilot platforms, industrial Internet platforms, etc., and promote the integration of production, supply and marketing. It was necessary to strengthen the strategic layout and standard guidance of intellectual property rights, promote clusters to lead or participate in the preparation of national standards and industry standards, and form core competitiveness.

3. Xi Jinping had a telephone conversation with the President of the European Council

President Xi Jinping had a telephone conversation with European Council President Costa on the phone. Xi stressed that China and the EU have no fundamental conflicts of interest and no geopolitical contradictions, and are partners in mutual achievement. Over the past 50 years, China-EU relations have not only contributed to each other's development, but also made important contributions to world peace and prosperity. The more severe and complex the international situation becomes, the more important it is for China and the EU to uphold the original aspiration of establishing diplomatic relations, strengthen strategic communication, enhance strategic mutual trust, and adhere to the positioning of partnership. China has confidence in the EU and hopes that the EU will also become a trusted partner for China. China and the EU have complemented each other's advantages in economic and trade cooperation, and both sides are defenders of the multilateral trading system, and have formed a strong economic symbiotic relationship. China's commitment to high-quality development and high-level opening-up will bring new opportunities for China-EU cooperation. China and the EU need to open up to each other, consolidate existing cooperation mechanisms, and create new growth points for cooperation. (CCTV News)

4. Ministry of Natural Resources: China has made a major breakthroughs in the exploration of ultra-deepwater and ultra-shallow gas

Xiong Zili, Director of the Department of Geological Exploration and Management of the Ministry of Natural Resources, introduced that the new round of prospecting breakthrough strategic actions focus on energy minerals, bulk minerals, and strategic emerging minerals, and achieve major breakthroughs in unconventional oil and gas such as deep coalbed methane and ultra-deepwater natural gas around key metallogenic areas and large oil and gas basins. Three 100-billion-square-meter deep coalbed methane gas fields have been discovered in the Ordos Basin, with proven geological reserves exceeding 500 billion cubic meters, close to 70% of the total coalbed methane proven in the region. The discovery of the world's first ultra-deepwater and ultra-shallow large-scale gas field, and the new proven geological reserves of natural gas in the Lingshui 36-1 gas field in the southeast sea area of Qiongnan exceeded 100 billion cubic meters, marking a major breakthrough in China's exploration in the field of ultra-deepwater and ultra-shallow gas.

5. Xuan Changneng, Deputy Governor of the People's Bank of China: This year will further reduce the overall cost of liabilities of banks and ease the pressure on banks' net interest margins

On January 14, Xuan Changneng, Deputy Governor of the People's Bank of China, said at a press conference of the State Council Information Office that in order to achieve the goal of reducing the comprehensive financing cost of society, the People's Bank of China will implement comprehensive policies and expand the interest rate policy space. First, we will continue to strengthen the implementation of interest rate policies. This year, we will further reduce the overall debt cost of banks, ease the pressure on banks' net interest margins, and better balance the relationship between the health of the negative balance sheet of the banking sector and the decline in the financing cost of the real economy. The second is to take into account the internal and external balance. We will take multiple measures to maintain the basic stability of the RMB exchange rate at a reasonable and balanced level. The third is to speed up the replenishment of bank capital. The Ministry of Finance has recently made it clear that it would support large banks to replenish their capital through the issuance of special treasury bonds, and local government special bonds are also an important channel for small and medium-sized banks to raise capital, which is also an important embodiment of the synergy of fiscal and monetary policies.

International News

1. The US PPI data for December rose only modestly, and the increase was less than expected

The US PPI data for December rose modestly, but this is unlikely to change the Fed's view that it will not cut rates again until the second half of the year due to the strong performance of the job market. The U.S. Bureau of Labor Statistics reported on Tuesday that the PPI rose 0.2% last month, while economists had forecast a 0.3% rise. Among the year-on-year increases, the PPI rose 3.3% after rising 3.0% in November. The surge in year-on-year increases reflects the decline in prices last year, especially for energy products, which have been taken out of the calculation. Currently, at least one Wall Street institution (Bank of America) now believes that the Fed's easing cycle is over. Goldman Sachs expects two rate cuts in June and December, down from the previous three.

2. International Labour Organization: Global economic growth slows and labor market recovery is difficult

The ILO's World Employment and Social Outlook: Trends to 2025 report shows that global economic growth is slowing, making it more difficult for the labour market to fully recover. According to the report, in 2024, the number of global employment kept pace with the growth of the labor force, and the unemployment rate stabilized at 5%. However, the youth unemployment rate barely improved, remaining high at 12.6 per cent. Low-income countries faced the greatest difficulties in creating decent jobs. Challenges such as geopolitical tensions, rising costs of climate change and unresolved debt were weighing on labor markets, the report notes. The economic growth rate in 2024 was 3.2%, down from 3.3% and 3.6% in 2023 and 2022. A similar level of growth is expected in 2025, but a gradual deceleration is expected in the medium term. The report found that although inflation has fallen, it remains high, reducing the value of wages.

3. Economists: The probability of a rate hike by the Bank of Japan has increased, and the yield of Japanese bonds has risen

The increased likelihood of a rate hike by the Bank of Japan at this month's meeting led to a jump in Japanese government bond yields. Economists at Morgan Stanley's MUFG Securities, citing the Bank of Japan's deputy governor's speech, said, "The Bank of Japan's assessment of wage increases in 2025 and uncertainty about the incoming U.S. government has been raised a notch." We now see a higher probability of a BOJ rate hike in January. "The 2-year JGB yield rose 3.5 basis points to 0.680%, the highest level since October 2008, the 10-year yield rose 4.5 basis points to 1.240%, and the 40-year yield rose 3 basis points to 2.755%, having previously hit an all-time high of 2.760%.

4. Russia's largest shipping company: New US sanctions have caused operational difficulties

Sovcomflot, Russia's largest shipping company and leading oil tanker group, said on Tuesday that new U.S. sanctions would cause more operational difficulties and accused the West of undermining the global merchant shipping system. "The company's ships are not part of the 'shadow fleet'," Sovcomflot said. The sanctions against Sovcomflot are not based on the company's violations and have no legal basis, the sanctions are solely based on the political interests of individual countries, including the United States. "The U.S. previously imposed the most extensive sanctions to date on Russia's oil and gas revenues.

5. UBS: Mixed economic signals: The Reserve Bank of Australia is not expected to rush to cut interest rates in February

The RBA's February meeting will face conflicting economic signals. UBS economist Nick Gunnon said the upcoming Q4 CPI data would open the way for interest rate cuts. UBS expects the revised average inflation rate for the final months of 2024 to be 0.6%, the lowest level in more than three years, and the annualized CPI could fall sharply to 2.3% from 3.2% in the third quarter. Still, the RBA must take into account the job market and consumption, both of which are strengthening, Genenon said. Government spending is also growing rapidly, and the government has proposed more stimulus ahead of the May elections. The rise in global bond yields reflects a weakening of the market's reaction to expectations of a rate cut. All in all, he said, the RBA is unlikely to rush to ease monetary policy next month.

Domestic Macro Economy Index