China's Commerce Ministry (MOFCOM) has taken a significant step by requesting the World Trade Organization (WTO) to establish an expert group to examine Turkey's restrictions on Chinese electric vehicles (EVs). This move highlights the growing trade tensions between the two nations. At the same time, the United States Trade Representative has identified China's dominant position in maritime, logistics, and shipbuilding as 'actionable' under Section 301, indicating potential for increased trade scrutiny.
Amid these developments, Scott Bessent, the nominee for U.S. Treasury Secretary, described China as having the most unbalanced economy in history. This statement comes as China's economy struggles with a severe recession or depression, prompting efforts to 'export its way out.' Despite these challenges, China reported a higher-than-expected GDP for the fourth quarter, stabilizing the full-year 2024 GDP figure at 5.0%.
In Europe, the European Central Bank (ECB) announced that Centeno will not be appointed for a second term after his current term ends on July 19th, 2025. Meanwhile, in North America, Canada is gearing up to implement retaliatory tariffs, which may include critical minerals, as global trade tensions continue to escalate.
The U.S. equity futures rose by 0.2% during Asian trading, reflecting a cautious optimism in the market. However, Asian equities followed the U.S. market's directionless lead, with Japan's Nikkei underperforming by 0.6%. This mixed performance suggests uncertainty among investors amid the ongoing global economic shifts.
China's total investment in the real estate sector contracted by 11% in 2024, further highlighting the challenges facing its economy. In response to these economic pressures, China's Commerce Ministry plans to launch an anti-dumping and anti-subsidy investigation into U.S. subsidies in its mature and legacy chip industry. This move could exacerbate existing trade tensions between the two nations.
Additionally, China's People's Bank of China (PBOC) injected CNY105 billion in 7-day reverse repos and net injected CNY101 billion to support its economic recovery efforts. This monetary policy action aims to provide liquidity and stabilize the financial system amid ongoing economic uncertainties.
The market sees an 80% chance of a 0.25 basis point rate hike next week, up from a 74% probability yesterday. This anticipated increase reflects the ongoing adjustments in monetary policy in response to global economic conditions.