Politburo signals more support in 2025. That’s fine, but really some of the challenges need leaving alone (real estate), some are exacerbated by loser policy (credit misallocation), some aren’t really impacted by the policy tools (skittish sentiment, and local government austerity).

Deflation continues. Core prices been at 3.5 yr low for a while, and deflation at factory gate been a reality for most of post-pandemic period. Obviously it forces up real costs of borrowing. Hard to tell if it’s mostly due to weak demand or excess supply. Probably both in some sectors.

Part of the reason consumption has been underwhelming in China is that the policy focus has seemingly pivoted away from the affluent, and the top 20% of income earners control around 60% of savings and account for 55% of consumption. But sentiment is varied across the country by different groups.

I find discussions with African policymakers and businesses hellbent on ring fencing China’s trade and investment in Africa from China’s internal domestic economic adjustment so tiring. The past decade has illustrated this is not doing the job.

30% of steel consumed by China now used in machinery, off setting soft demand from infrastructure and construction.

Chinese leadership in renewable energy is leading to a rise in Chinese investment in Africa. Up 10bn since 2019. It’s now second most sizable sector. And, akin to chinas role in building out 3G networks, this will be a space more and more dominated by Chinese firms.