Economy

The readout flagged achievements in strengthening economic resilience, advancing technological innovation, deepening reforms, and safeguarding people’s livelihoods. These efforts have contributed to maintaining stability and reinforcing China’s economic and comprehensive national strength.Going forward, the CPC Central Committee stressed the need to prioritize stability while fostering progress, focusing on areas such as boosting domestic demand, enhancing innovation, and accelerating the green transformation of the economy. Proactive fiscal measures, supported by prudent monetary policies, will play a central role in stimulating consumption, improving investment efficiency, and driving industrial modernization. The leadership also underscored the importance of counter-cyclical adjustments and policy coordination to mitigate risks and ensure macroeconomic stability.The meeting called for expanded high-level opening-up, stabilization of foreign trade and investment, and measures to address vulnerabilities in the property and stock markets. In addition, regional strategies and urban-rural integration will be reinforced to stimulate balanced development, while carbon reduction and environmental goals will remain integral to the country’s economic transformation.Alongside economic priorities, the meeting reviewed efforts in building a clean governance framework and combating corruption. Discipline inspection and supervision agencies were urged to maintain high vigilance against corruption, strengthen oversight, and foster an environment of accountability and integrity. Xi Jinping emphasized the importance of aligning these anti-corruption efforts with broader reforms to ensure their effectiveness in promoting sustainable growth and modernization.The meeting concluded with a decision to convene the fourth plenary session of the 20th Central Commission for Discipline Inspection from January 6 to 8, 2025, where further strategies for comprehensive governance will be discussed. More

The US Federal Reserve is widely expected to cut interest rates next week, as the November nonfarm payrolls report showed underlying weakness in the labor market, even as jobs growth rebounded from an October reading that was depressed due to strikes and hurricanes.Financial markets currently see a over 80% chance of a 25 basis points rate cut at the US central bank’s Dec. 17-18 policy meeting.The one data point that could seriously upset this thinking is the November consumer price inflation release, due on Wednesday, amid signs Inflation has started ticking up lately.The Fed’s preferred inflation measure, the core PCE index moved up to 2.8% in October, while President-elect Donald Trump’s plans to raise tariffs on imports have also raised inflationary concerns. It also looks likely that Jerome Powell will continue to drive the US central bank’s policy thinking, after Trump said in an interview aired on Sunday he will not try to replace the Federal Reserve Chair Jerome Powell upon taking office in January.”No, I don’t think so. I don’t see it,” Trump said on NBC News’ “Meet the Press with Kristen Welker” when asked if he would seek to remove Powell, whose term ends in 2026.Trump named Powell to the Fed chair in early 2018 to replace Janet Yellen, but the relationship quickly soured, with Trump frequently attacking the Fed and its chief during his first term in office. US stock futures have started the new week in a relatively muted fashion, as investors await the release of key inflation data. By 03:55 ET (08:55 GMT), the Dow futures contract was down 55 points, or 0.1%, while S&P 500 futures climbed 2 points, or 0.1%, and Nasdaq 100 futures rose by 40 points, or 0.2%.The S&P 500 and Nasdaq Composite closed at fresh records Friday, rising around 1% and over 3% for the week, respectively. The Dow Jones Industrial Average underperformed, closing the week down 0.6%.The economic data slate is relatively empty Monday, and all eyes will be on the release of the latest consumer inflation data on Wednesday [see above], as investors seek confirmation that the Fed will cut interest rates next week.On the corporate side, the quarterly earnings season is gradually drawing to a close, but investors will still be able to study Oracle’s (NYSE:ORCL) results after the close.It’s not only the Fed that is expected to cut interest rates in the near future.The European Central Bank meets on Thursday, its final policy meeting of the year, with economists overwhelmingly expecting another 25-bps rate cut – which would be the fourth such cut this year.Eurozone inflation ticked higher in November, but still appears to be heading towards the ECB’s 2% target, with some signs that wage pressures are easing.The ECB is also to publish updated growth and inflation forecasts, which are likely to be revised lower for next year.Since the ECB’s last meeting in October tariff risks for Europe have risen after Trump’s election win; France and Germany are grappling with political turmoil; business activity has slowed sharply, and the euro has weakened.Elsewhere, the Bank of Canada could cut this week by the larger 50 bps, while the Swiss National Bank could also ease by 50 bps given how much it has been spending to restrain the Swiss franc. Chinese consumer inflation shrank more than expected in November, falling to a five-month low as a swathe of recent stimulus measures did little to offset a stubborn deflationary trend. November CPI slumped 0.6% month-on-month in November, government data showed on Monday. The reading was softer than expectations for a drop of 0.4% and weakened from the 0.3% contraction seen in the prior month.CPI grew 0.2% year-on-year, less than expectations of 0.5% and weakening from the 0.3% growth seen in the prior month. The reading indicated that while some facets of China’s economy had picked up amid aggressive stimulus measures from Beijing, consumer spending remained fragile. This lent more credence to growing investor calls for more targeted, fiscal measures aimed at shoring up private consumption.China’s leaders on Monday pledged “more proactive” fiscal measures and “moderately” looser monetary policy next year to boost domestic consumption, according to an official readout of a key policy meeting that outlined upcoming economic priorities.Fitch Ratings revised down its 2025 Chinese GDP growth forecast to 4.3% from 4.5%, earlier Monday. The credit rating agency also adjusted its 2026 growth projections to 4.0%, down from 4.3% in September.Crude prices rose Monday, as the overthrow of the Bashar al-Assad regime in Syria introduced greater uncertainty to the oil-rich Middle East, although concerns over weakening demand persisted. By 03:55 ET, the US crude futures (WTI) climbed 1.3% to $68.08 a barrel, while the Brent contract rose 1.1% to $71.90 a barrel.Syrian rebels announced on state television on Sunday they had ousted President al-Assad, raising fears of a new wave of instability in a region already gripped by war.However, gains have been tempered by weak Chinese inflation figures [see above] raising more concerns about economic growth in the world’s largest crude importer.Additionally, Saudi Aramco (TADAWUL:2222), the world’s biggest crude oil exporter, has reduced its January 2025 prices for Asian buyers to the lowest level since early 2021, it said on Sunday, as it struggles for demand. More

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New regulations on human rights are forcing global companies to address concerns about modern slavery and tackle problems in their supply chains.In Europe, a landmark human rights rule was adopted by the EU in July 2024. The Corporate Sustainability Due Diligence Directive (CSDDD) requires European companies — and some businesses abroad but with significant turnover in the EU — to identify and prevent possible human rights abuses. This applies to product manufacturing supply, raw materials, and other aspects of companies’ supply chains. The CSDDD builds on human rights due diligence legislation that is already in force in France, Germany, and the Netherlands. And, although the CSDDD does not come into effect more widely until 2027, big global companies in the UK, US and elsewhere have added language to their regulatory filings warning investors about the looming regulation. The law has been hailed by activists as one of the most significant advances in years. It “should send a message to all companies everywhere that they must respect human rights”, Amnesty International said this year. The rule also addresses the concerns of some large Dutch pension funds that have raised the alarm about slavery in corporate supply chains.As a result, the CSDDD will become an important issue for investors, because companies that fail to take modern slavery seriously will face increasing legal risks, according to the Minderoo Foundation, an Australian philanthropic organisation. “Investors play a crucial role in driving ethical business practices and ensuring companies respect human rights in their operations,” Minderoo said in an October report.Europe’s new rule joins the US’s 2021 Uyghur Forced Labor Prevention Act. While the CSDDD applies globally, the US law targets allegations of forced labour in the Xinjiang region of China, home to the Muslim Uyghur people. Imported Xinjiang goods are prohibited, although there can be exceptions. Up to June 2024, the Uyghur US Customs and Border Protection had stopped more than 4,000 shipments of goods valued at more than $3.6bn for enforcement review, according to the agency.These US regulations are already posing problems for businesses and investors. In May, the US Senate published a report alleging that BMW and Jaguar Land Rover cars and components imported to the US included a part made by a company linked to Uyghur forced labour. The senators had investigated eight carmakers to find out if their supply chains included one component made using forced labour from China’s north-western Xinjiang region. BMW was found to have imported about 8,000 Mini Cooper cars containing components made by a Chinese company that had been put on the US forced-labour ban list. The report also noted that JLR continued to import components even after being informed. Both companies said they were taking action to fix their compliance issues.While these EU and US laws are new, human rights due diligence regulations have a long history. The 2010 Dodd-Frank law to reform Wall Street forced thousands of companies to identify any “conflict minerals” from the Democratic Republic of Congo and nearby countries. Earlier efforts to shed light on human rights concerns in the minerals industry had included the Kimberley Process — a global effort started in 2003 to increase transparency in the diamond supply chain after diamonds were used to fund a series of brutal civil wars in Africa in the 1990s.With the CSDDD still a few years from coming into force, “many [companies] are paying no attention to the new rules”, says David Birchall, a senior lecturer at Macquarie University in Australia. But others are already on their way towards compliance thanks to local laws, he adds. Volkswagen, for example, has staffers to ensure it complies with the German human rights due diligence law. “The key thing for multinationals is to know which laws they are covered by, as well as to begin preparing for the broader and often more stringent CSDDD,” Birchall says. “For US firms, this depends on where they do business, their sector, [and] their size,” he adds. “It is complicated.”It is so far unclear whether Donald Trump’s incoming administration might try to exempt US companies from CSDDD or other European human rights requirements. The president-elect did, however, support the Uyghurs in his first term. His administration banned exports to some Chinese companies involved in surveillance of the Muslim minority and imposed visa restrictions on officials implicated in detentions.Republicans, who will have control of Congress and the Senate, have overwhelmingly supported tough legislation to combat the mass detention of Uyghurs and demonstrated a willingness to pressure Trump to take action. “Certainly, the Uyghur forced labour prevention act had bipartisan support before,” says Rachel Chambers, a professor at the University of Connecticut. “The Chinese, of course, view laws like this as geopolitically motivated.”A woman in a Uyghur neighbourhood in Xinjiang. Western car companies were criticised by a US Senate report for using parts made by a Chinese group on a forced-labour ban list More

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As the global race for renewable energy accelerates, the billions of dollars of subsidies that the US, Europe and China dole out to vie for market dominance are likely to have implications for investors.This year, the EU adopted the Net-Zero Industry Act, which aims to make investing in solar, wind and other clean technologies more appealing. The legislation eases bureaucracy, accelerates project approvals, and targets reaching 50mn tonnes of carbon dioxide storage capacity in Europe by 2030. Investors will have seen that these subsidies have begun to prompt companies to take action. For example, ArcelorMittal, the world’s second-largest steelmaker, has started testing a carbon capture project in Ghent, Belgium, according in a Morgan Stanley report in June. This facility will test the feasibility of a full-scale carbon capture at the site as the Act comes into effect, Morgan Stanley said.Asset manager Invesco said the legislation is “expected to be a game-changer for EU companies transitioning to net zero emissions”, in its own report in August. The law will accelerate demand for European-based manufacturers, such as solar cell makers. “The €375bn in grants, tax credits, direct investments and loans from the NZIA will help to spur additional capital and operating expenditures,” the report concluded.The EU’s action highlights how the bloc is eager to match renewable energy subsidies adopted by the US and China in recent years. The Biden administration’s 2022 Inflation Reduction Act angered many European officials, who worried the $369bn package would lure cleantech businesses and investments away from their region. It even prompted the EU to accuse Washington of breaching World Trade Organization rules. The head of carmaker Stellantis and other European executives called for Brussels to consider reciprocal measures, or change its rules to respond to the IRA.The EU should “take action to rebalance the playing field . . . [and] improve our state aid frameworks”, European Commission president Ursula von der Leyen said shortly after the US adopted the IRA. The EU’s net zero law was quickly proposed in 2023 to counter the American legislation. “There is a risk that the IRA could lead to unfair competition,” von der Leyen warned.President Joe Biden announces a $3bn investment from the Inflation Reduction Act in October to help reduce pollution from US ports More