IFF Newsletter | China's Jan. Residential Sales Grow

TIME：2025-02-20

From the Editor

Xi Jinping, general secretary of the Communist Party of China (CPC) Central Committee, on February 17 urged efforts to promote the healthy and high-quality development of the country's private sector.

During a symposium on private enterprises, Xi emphasized the broad prospects and potential for private businesses in the new era. He stated that it is an opportune time for private enterprises and entrepreneurs to leverage their capabilities fully.

US consumer price index last month released on February 13 showed that inflation is punching back in the United States, and U.S. President Donald Trump could end up facing the same challenges that dragged down his predecessor, former President Joe Biden.

The consumer price index increased 3 percent in January from a year ago, the report from the Labor Department showed, up from 2.9 percent the previous month.

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Latest from the IFF

IFF's 30th Academic Workshop on "Cross-Border Payments Transformation" Marks a Successful Conclusion

In a bold commitment to reshape the future of global finance, the G20 pledged in 2020 to slash cross-border transaction costs by 2027 while enhancing speed, transparency, and accessibility. This ambitious goal takes center stage as the Bretton Woods Committee's Multilateral Reform Working Group unveils its latest report, " A Dual Strategy to Transform Cross-Border Payments."

On February 19, the IFF hosted an online dialogue featuring prominent voices in the financial sector, including William C. Dudley, Chair of the Bretton Woods Committee; Siddharth Tiwari, Vice President of the International Finance Forum (IFF); and Gerry Rice, former Spokesperson at the International Monetary Fund (IMF). Together, they engaged in an enlightening discussion, diving deep into the transformative recommendations outlined in the report, marking a significant step toward a more inclusive global payment landscape.

IFF Unveils GlobalAI Competitiveness Index Report During the AI Action Summit

The spotlight shone brightly on Paris as the AI Action Summit took place from February 10-11, drawing representatives from 80 countries and industry leaders eager to explore the future of artificial intelligence. In a powerful collaboration, the InternationalFinance Forum (IFF) joined forces with Project Syndicate to tackle the pressing questions of our time: How can we harness the vast opportunities presented by AI while ensuring robust governance to mitigate potential risks?

The first part of the "IFF Global Artificial Intelligence Competitiveness Index Report" was unveiled in collaboration with Project Syndicate, reaching a global audience through Project Syndicate's newsletter. This partnership sparked lively discussions on the critical importance of AI safety among attendees and garnered enthusiastic responses. The report's release received extensive coverage from international media, marking a significant step toward a new era of AI innovation and governance.

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China News

China Sees Residential Property Sales Rise in January

In January, commercial residential property prices in China's first-tier cities saw a month-on-month increase, while second and third-tier cities experienced a slight overall decline, data from the National Bureau of Statistics(NBS) showed on February 19.

In first-tier cities—Beijing, Shanghai, Guangzhou, and Shenzhen—new home prices rose by 0.1 percent compared to December, although this marked a slowdown from the previous month. Prices for second-hand homes in these cities also increased by 0.1 percent, down from a 0.3 percent rise earlier.

In second-tier cities, new residential property prices recorded a marginal 0.1 percent increase, the first rise since June 2023, while second-hand home prices fell by 0.3 percent. Third-tier cities saw declines in the sales prices of new commercial housing and pre-owned properties, dropping by 0.2 percent and 0.4 percent, respectively.

China Holds First High-Level Symposium on Private Economy in Six Years

China held its first high-level symposium on the private economy on February 17 since 2018, sending a strong signal to stabilize expectations for the private economy and boost the confidence of private enterprises.

Chinese President Xi Jinping attended the symposium in Beijing and delivered an important speech after listening to representatives of private entrepreneurs.

In his speech, Xi emphasized the role of private enterprises in advancing China's broader goals in technological innovation, promoting rural vitalization and improving people's well-being.

Huawei Technologies' Ren Zhengfei, BYD's Wang Chuanfu, New Hope Group's Liu Yonghao, Will Semiconductor's Yu Renrong, Unitree Robotics' Wang Xingxing, and Xiaomi's Lei Jun were among the private entrepreneurs attending the symposium. Representatives from Contemporary Amperex Technology, Chint Group, Alibaba Group Holding, and DeepSeek were also present.

Chinese Tech Giants Race to Integrate Deepseek's AI Models Into Their Platforms

Major Chinese tech companies are rushing to incorporate Deepseek's artificial intelligence models into their platforms, marking a significant expansion in AI applications across the country's digital ecosystem.

Tencent Holdings' WeChat, China's dominant social media platform, began grey-box testing of Deepseek-R1 integration with its search function on February 16. Selected users can now access the AI model through WeChat's search feature at no cost.

On the same day, Baidu announced the comprehensive integration of Deepseek's search capabilities and its ERNIE foundation model across its search engine and AgentBuilder platform. Users can freely access both models' advanced search functions, while developers on the AgentBuilder platform can utilize Deepseek's models to create and fine-tune AI agents.

Deepseek has gained attention for its superior reasoning capabilities, cost-effectiveness, and open-source advantages. However, the company faces challenges with server overload due to high traffic volumes. In response, major cloud service providers including Huawei Cloud, Tencent Cloud, Alibaba Cloud, and Baidu AI Cloud have integrated Deepseek's large language models into their platforms.

The automotive sector is also embracing Deepseek's technology. Chery Automobile, a leading Chinese automaker, recently announced a deep technical collaboration with Deepseek for intelligent large-model systems. The partnership will enhance Chery's Lion AI smart cockpit system with more accurate voice command responses and other intelligent features.

China’s New Bank Lending, Total Social Financing Hit Record Highs in January

New bank lending in China and increment of social financing, a broader measure of credit and liquidity to the real economy, both increased by more than expected last month to set fresh records, according to data released by the People's Bank of China on Feb. 14.

Chinese banks lent CNY5.13 trillion (USD713.8 billion) in January, a 4.3 percent rise from the same month a year earlier, and total social financing jumped by CNY583.3 billion (USD80.5 billion) to CNY7.06 trillion.

The balance of M2, a broad measure of money supply that covers cash in circulation and all deposits, had climbed 7 percent from a year ago to CNY318.52 trillion (USD43.93 trillion) as of Jan. 31, down from 7.3 percent a month earlier and missing expectations for 7.44 percent.

China to Tweak Monetary Policy With Internal, External Economic Conditions in Mind

The People's Bank of China (PBOC) will employ various monetary tools and adjust policies based on economic conditions, aiming to maintain adequate liquidity while aligning financing and money supply with the country's economic and price stability goals, the central bank announced in its fourth-quarter 2024 monetary policy report on February 13.

The PBOC projects stable economic growth for 2025, noting that stimulus measures from late 2024 have begun boosting production, demand, and market sentiment. The bank plans to implement a proactive fiscal policy alongside moderately loose monetary measures, with a focus on maintaining price stability.

Japanese Firms Have Growing Confidence in Chinese Market, Survey Finds

Japanese companies are showing increased confidence in the Chinese market. The survey found that 58% of Japanese companies plan to maintain or increase their investments in China, up 3 percentage points from last year，according to a new survey released on February 12.

53% of surveyed companies now rank China among their top three most important markets, while 34% reported revenue growth, up 7 percentage points from the previous quarter. Profit growth was reported by 33% of firms, a 16-point increase from last year, the report released by the Japanese Chamber of Commerce and Industry in China said.

The number of companies optimistic about China's economic outlook increased by 5 percentage points, while those with a cautious outlook dropped to 44%, down 20 points from the previous year. Companies cited increased demand and higher order volumes as key factors.

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International News

Australian Central Bank Cuts Interest Rates For 1st Time in Over 4 Years

Australia's central bank on February 18 cut interest rates for the first time in over four years.

The board of governors of the Reserve Bank of Australia (RBA) announced a decision to lower the cash rate target by 25 basis points to 4.1 percent, and the interest rate paid on Exchange Settlement balances to 4 percent.

It marks the first time the RBA has cut the key interest rate since November 2020 and comes after more than a year of the rate being on hold at a 13-year high of 4.35 percent.

U.S. Tariffs Pose "Significant Risks" to Economy, Says German Central Bank Chief

German Bundesbank President Joachim Nagel warned on February 17 that U.S. tariffs could significantly impact Germany's economic growth, following the EU's statement opposing the policy.

At the Speaker's Luncheon of the Union International Club in Frankfurt, Nagel highlighted that Germany, as an export-driven economy, would face substantial losses due to shifts in U.S. trade policy. He projected that escalating trade tensions could reduce Germany's economic output in 2027 by 1.5 percentage points and raised concerns about potential inflation, although the exact effects remain uncertain.

Nagel also noted that increased tariffs could create a "self-inflicted economic headwind," weakening both Germany's economy and potentially undermining U.S. growth while disrupting global supply chains.

The EU, opposing President Trump's proposed trade policy, stated on February 14 that it would respond firmly against unjustified barriers to trade, emphasizing its commitment to protecting European businesses, workers, and consumers.

British Economy Grows by 0.1% in Q4 2024, Surpassing Expectations

The British economy grew by 0.1 percent in gross domestic product (GDP) in the final quarter of 2024, defying expectations of an economic contraction and improving on the zero - growth seen in the previous quarter, according to data released by the Office for National Statistics (ONS) on February 13|.

In December, monthly GDP was estimated to have risen by 0.4 percent, driven by growth in the services sector. Services output also expanded by 0.4 percent in December, building on gains of 0.2 percent in November and in the fourth quarter as a whole.

For the year 2024, the ONS projected an annual GDP growth of 0.8 percent compared to 2023.

The data also revealed a 3.2 percent decline in business investment in the fourth quarter, alongside weaker trade performance, factors that could add further challenges to the economic outlook.

Canada, EU Seek Stronger Trade Partnership Amid U.S. Tariffs

Canadian Prime Minister Justin Trudeau met with European Council President Antonio Costa and European Commission President Ursula von der Leyen in Brussels on February 13 to reaffirm strong trade and economic ties between Canada and the European Union (EU).

The meeting followed U.S. President Donald Trump's decision to impose a 25-percent tariff on steel and aluminum imports upon entering the United States. Discussions focused on enhancing trade, investment, and economic cooperation.

The leaders also addressed global trade dynamics and stressed the importance of their Strategic Partnership Agreement and the Comprehensive Economic and Trade Agreement (CETA) in promoting economic stability.

They underscored Canada-EU collaboration, particularly in the context of Canada's G7 Presidency, to navigate an increasingly competitive global landscape.

U.S. Inflation Worse in January With Higher Grocery, Gasoline Prices

U.S. inflation accelerated last month as the cost of groceries, gasoline and rents rose, a disappointment for families and businesses struggling with higher costs and likely underscoring the Federal Reserve's resolve to delay further interest rate cuts, the report from the Labor Department showed on February 12.

The consumer price index increased 3 percent in January from a year ago, according to the report, up from 2.9 percent the previous month. It has increased from a 3.5-year low of 2.4 percent in September.

Elevated prices created a major political hurdle for former President Joe Biden. President Donald Trump pledged to reduce prices in last year's campaign, though most economists worry that his proposed tariffs could at least temporarily increase costs, noted The Associated Press.

OPEC Maintains Oil Demand Forecasts For 2025, 2026

The Organization of the Petroleum Exporting Countries (OPEC) announced on February 12 that it is maintaining its previous forecasts for global oil demand growth in 2025 and 2026.

In its February monthly oil market report, OPEC projects a "healthy" increase in global oil demand, estimating growth of 1.45 million barrels per day (bpd) in 2025, followed by a rise of 1.43 million bpd in 2026, figures unchanged from last month's assessment.

The organization also left its global economic growth projections for 2025 and 2026 unchanged, forecasting a 3.1 percent expansion this year and 3.2 percent in the following year.