The US election results of 5 November 2024 echoed through December. A rupture between erstwhile Trump allies, the populist MAGA base and ‘tech bros’ Musk and Ramaswamy, culminated over the holiday in charges by the former that Musk, in virtue of his PRC manufacturing interests, was an undeclared agent of Beijing.
Beijing meanwhile hunkered down, preparing for the incoming US administration, with renewed calls for Party leadership, economic resilience, and throwing in a little charm diplomacy.
can political order save the economy?
A 9 December Politburo meeting laid groundwork for CEWC (Central Economic Work Conference), doubling down on anti-corruption. Next day Xi Jinping convened PRC satellite parties, nagging them to support the CPC’s strategies, and leaning on them to better use the United Front Work Department to foster positive expectations of the economy. The discipline theme was kept up in a Politburo ‘democratic life’ meeting on 26–27 December, a familiar occasion for airing Party criticism. Xi urged the Politburo to abide by Party rules, steering away from corruption and supporting those willing to innovate.
The annual CEWC gathered top leaders on 11–12 December. Boosting consumption is now paramount, replacing the 2024 CEWC top priority of ‘building a modern industry system’.
Plans for more proactive macroeconomic policy are to be unveiled at the upcoming (March 2025) National People’s Congress, says Han Wenxiu 韩文秀 Central Financial and Economic Commission Office. These will be rolled out through 2025.
The prospect of massive monetary easing sent bond prices tumbling: 10-year central notes crossed the 2 percent yield threshold on 2 December, dropping to 1.7 on the 13th. Banks seem to be looking to hedge against future revenue falls. According to Yicai, the PBoC began meeting with financial institutions on 18 December to probe ‘irregular’ trading behaviour.
More fiscal spending is on the cards: The State Council issued opinions on 27 December, further relaxing rules on special bond issuance. This will alleviate the bottleneck facing such bonds, explains Li Rong 李戎 Renmin University, allowing localities to spend on broader ranges of projects.
MoF (Ministry of Finance) and other agencies issued new trial criteria for corporate sustainability disclosures. Aiming to standardise such disclosure and align it with global best practice, the new text adds to a wider bid to improve ESG (environment, social and governance) issues across major enterprises.
tell-tale trade figures
Failing expectations, November exports grew 6.7, while imports dropped 3.9 percent over 2023. Recording their sharpest fall since September 2023, weak import figures reveal low consumer demand.
Singling out the US for the first time, MofCOM (Ministry of Commerce) launched new export controls on dual-use critical minerals. Licenses for some dual-use items will not be ‘granted in principle’. Graphite exports will be strictly reviewed. Expanding the measures’ scope and halting transhipments, transfer of these products originating from the PRC is also banned.
Making unilateralism more costly for Washington, these measures may go beyond entities and assets in the PRC, impacting entire global industry chains related to the PRC, notes Huo Jianguo 霍建国 China Society for WTO Studies. As PRC–US high-tech rivalry intensifies, more sanctions can be expected, worsening decoupling as both sides step up ‘self-reliance’.
PRC pundits continually dissect and assess potential US trade restrictions. Trump’s threatened measures would disrupt bilateral trade and severely impact global industry and supply chains, warned top trade commentator Zhang Monan 张茉楠 China Centre for International Economic Exchanges, US and Europe Research Department.
The 2024 CEWC again urged coordinating trade policy and other priorities, pledging more support to firms. An NDRC Opinion stressed leveraging domestic trade credit insurance to further ‘integrate domestic and foreign trade’ (i.e., sell export goods at home, and redirect domestic goods to exports). By stepping up domestic trade credit insurance, Beijing hopes to bolster firms’ finances during transition, reduce risks and boost domestic circulation and demand.
Other trade developments in December included
- anti-dumping probe period on EU brandy to run on to April 2025
- NDRC plans to bolster global trade in Yiwu, Zhejiang
- 2025 customs tariff adjustment plan released
more subsidies to boost agriculture
Following CEWC, the Central Rural Work Conference in supporting rural society and the economy as a whole, zoomed in on the role of food security and forestalling relapse into poverty. Measures compensating major grain provinces with resources from wealthy eastern consumer provinces will likely finally drop in 2025. Farmland will be under tighter supervision with a central monitoring system coming online. Long-existing rent-seeking via high-standard farmland projects will likely be targeted. Growth is expected to be stimulated by funding more agricultural subsidies and rural infrastructure projects.
Boosting consumption and overall confidence, as the CEWC had proclaimed, are equally important. The rural sector, the weakest link, relying on central transfers for farmer incomes, needs more support than other sectors. As with the CEWC, the rural Conference raised the imperative of boosting essential rural public services, aiming to beef up people’s willingness to buy and invest, supported by better pensions, education and healthcare services.
Competitive imported beef, principally from South America, has worsened oversupply issues in the domestic market triggering a safeguard investigation. The probe, expected to conclude within eight months, might lead to extra tariffs, like in the case of sugar, yet is unlikely to effectively raise domestic productivity.
ballooning new energy
The National Energy Work Conference on 15 December 2024 revealed the continuing build-out of renewable power capacity. Nationwide, over 300GW of new capacity was added in 2024, far over the 200GW target set at last year’s conference, buoying expectations for the green transition. With a further 200GW targeted in 2025, will the centre now pressure loss-making renewable firms to cut back excess capacity?
Reports from the two leading oil SOEs reveal rapid structural transformation. CNPC’s (China National Petroleum Company) annual energy outlook forecasts oil consumption peaking in 2025 after a modest rise in 2024. Sinopec, which forecast peaking by 2027 a year ago, now estimates non-fossil energy has exceeded oil consumption in 2024, a first.
PRC–US science gets a lifeline
The PRC–US Science and Technology Cooperation Agreement was updated and extended by a protocol signed in Beijing by US and PRC delegates on 13 December. Limited to basic research, it excludes critical and emerging tech e.g. AI, quantum computing, and biotech. The incoming Trump administration may selectively cancel or delay projects.
On 27 December, the National Development and Reform Commission (NDRC) added a new low-altitude economy division to streamline top-level policy and liaise between the PLA Air Force (that restricts use of much PRC airspace) and an emerging civilian sector.
international hospital procedures cut
International hospitals launching in the PRC came under further NHC structures on 29 November, prohibiting haematology and procedures with ‘high ethical risk’: organ transplants, reproductive tech, prenatal screening and diagnosis, etc.
Launching 15 December, nationwide private pensions seek to address dwindling funds due to population ageing.
A 10th round of national drug procurement yielded the lowest price cuts so far. Concerns about price over quality triggered pilot measures in several FTZs. MoF set a deadline of 1 February 2025 for ‘reasonable’ drug quality.
complete AI education from primary school
MoE (Ministry of Education) launched a first national-level guide on 2 December for training in AI in elementary and secondary schools. By 2030, students should receive full-scale AI education.
...and that charm diplomacy
Year-end diplomacy underscored Beijing’s desire to mend fences with neighbours. Japanese foreign minister Takeshi Iwaya visited Beijing on 25 December, agreeing to security talks. Mutual willingness to mend ties, marred by longstanding issues, was on view, as well as recalculation in the face of the looming Trump presidency.
Also warmer, China–India relations had been tense due to border clashes in eastern Ladakh since April–May 2020. Delegates resumed talks on boundary issues on 18 December. Both sides agreed that broader relations need not be affected.