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China’s industrial output rose 4.8% year-on-year in November, the weakest pace since August 2024, according to National Bureau of Statistics (NBS) data released Monday. The print eased from 4.9% in October and fell short of the 5.0% gain forecast in a Reuters poll, pointing to softer momentum in factory activity into year-end.

Market impact: Negative for China growth sentiment and cyclicals (industrials, materials); mild headwind for CNY if weakness persists, while bonds may find support on slower activity.

China Vanke said it will convene a second bondholder meeting after failing last week to secure approval to extend by one year a bond payment due today. The bond includes a five-business-day grace period, but the renewed push for an extension underscores near-term refinancing pressure and heightened creditor scrutiny. Vanke shares tumbled in both Shenzhen and Hong Kong (HK:2202).

Market impact: Negative for HK/China property sentiment and credit; potential spillover risk to peers and related banks if restructuring uncertainty persists.

China’s monetary and credit data showed a sharp pickup in November. New loans jumped to CNY 390B, well above the prior CNY 220B, signaling stronger credit issuance by banks.

Total Social Financing surged to CNY 2,490B, a dramatic increase from CNY 810B, reflecting broad-based financing support to the economy.

Meanwhile, M2 money supply growth eased slightly to 8.0% YoY from 8.2%, and outstanding loan growth edged down to 6.4% YoY from 6.5%, indicating that liquidity growth remains steady but controlled.

The data points to an active policy push to support growth through credit channels without triggering excessive monetary expansion.

Market impact: Neutral to mildly supportive for CNY; strong financing activity offsets softer money supply growth.

China’s Thomson Reuters IPSOS Primary Consumer Sentiment Index (PCSI) declined to 70.42 in December, down from 72.55 previously. Despite the pullback, sentiment remains at a high level, indicating continued household optimism supported by policy support measures and resilient income expectations, even as spending remains selective.

Market impact: Neutral for CNY; sentiment remains strong despite the modest monthly decline.

China’s CPI rose 0.7% YoY in November, matching expectations and accelerating from 0.2% previously, reflecting modest stabilization in consumer prices. However, on a monthly basis CPI fell 0.1%, missing the expected +0.2% and signaling weak household demand ahead of year-end.

Producer prices continued to contract, with PPI down 2.2% YoY, deeper than the expected -2.0% and widening from -2.1% previously. The data underscores persistent factory-gate deflation and ongoing pressure on industrial margins.

Market impact: Slightly negative for CNY; soft monthly CPI and deepening PPI deflation reinforce concerns about China’s domestic demand recovery.

China’s persistent industrial deflation is becoming a major drag on global trade dynamics, according to Jens Eskelund, president of the European Union Chamber of Commerce in China. He noted that China has experienced 37 consecutive months of factory-gate deflation, a trend that is widening distortions in pricing and competitiveness.

Eskelund added that the growing gap between deflation in China and inflation in Europe is further aggravating currency imbalances, complicating trade relations and intensifying pressure on European manufacturers.

Market impact: Negative for CNY sentiment and China-EU trade relations; long-running deflation increases structural risks and pricing distortions.

China’s trade surplus surpassed $1 trillion in November for the first time, driven by a surge in exports to Europe, Australia, and Southeast Asia following U.S. tariff measures. The shift in trade flows is intensifying diplomatic friction, with critics warning that widening imbalances are becoming increasingly unsustainable.

Chinese exports to the United States fell 29% YoY, while shipments to the European Union jumped 14.8% YoY, highlighting a rapid reorientation of China’s export markets.

Market impact: Mixed for CNY; record surplus supports the currency, but escalating trade tensions increase geopolitical and policy risks.

China posted a trade surplus of $111.68 billion in November, beating expectations of $100.20 billion and rising sharply from October’s $90.07 billion surplus. Exports grew 5.9% year-on-year, reversing the previous month’s 1.1% decline and outperforming forecasts of 3.8%. Imports rose only 1.9%, undershooting expectations for a 3.0% gain and signaling continued softness in domestic demand. The export rebound was supported by improving global trade conditions and a recent tariff truce with the U.S., which helped Chinese exporters regain momentum in overseas markets.

Market impact: Positive for CNY and Asian risk sentiment; strong exports bolster China’s external outlook despite weak domestic demand.

China’s property downturn is expected to persist, with home prices forecast to fall 3.7% in 2025, according to the latest quarterly Reuters poll — broadly unchanged from the prior survey.

The extended slump reflects weak demand, unfinished housing projects, developer liquidity stress, and limited impact from government support measures.

The poll projects a 2.8% decline in 2026, a sharper drop than the previous forecast of 0.5%, suggesting worsening sentiment and slower market recovery.

Prices are expected to remain flat in 2027, compared with earlier expectations of 2.0% growth, indicating a longer path to stabilization.

Market impact: Bearish for CNY and China property sector; prolonged price declines signal deeper structural challenges and may dampen investor confidence.

China’s Caixin Services PMI came in at 52.1 in November, matching expectations but easing from the previous 52.6. The reading indicates continued expansion in the services sector, though at a slower pace as demand growth moderates and business confidence remains cautious amid a patchy economic recovery.

Despite the slight slowdown, activity remains in solid expansion territory, supported by improving new orders and gradual stabilisation in consumer sentiment.

Market impact: Neutral to mildly bearish for CNY; slower PMI momentum signals softer service-sector growth.

China’s export-oriented economy has struggled to gain momentum since U.S. President Donald Trump took office in January, with economists estimating his tariffs have reduced the world’s second-largest economy’s export growth by about 2 percentage points or roughly 0.3% of gross domestic product.

Some major Chinese commercial banks have removed five-year, large-scale certificates of deposit with high yields from their offerings, in an effort to cut costs and offset margin pressure.

The shorter-term deposit products carry interest rates of 1.2% to 1.8%, compared with the five-year, large-scale CDs, which offer rates of about 2% to 2.1%.

In May, major state banks lowered deposit rates as authorities cut benchmark lending rates to help buffer the economy from the impact of the U.S.-China trade war.

Successive cuts to deposit rates in recent years have failed to curb explosive growth in Chinese household savings, intensifying concerns over the side effects that lower returns have on the country’s consumers, who tend to build their own safety net.