China's consumer inflation rose 1.3% in February, surpassing expectations, while the GDP growth target was lowered to 4.5%-5%. With significant funds allocated for boosting domestic consumption, there may be further stimulus measures if exports weaken, which could influence FXI positively as Chinese companies are likely to benefit from increased domestic demand.
China's Foreign Minister indicated softening tensions with the U.S. as meetings between leaders are planned. The ongoing discussions about tariffs, coupled with geopolitical issues, could have positive implications for FXI in the near term.
China's economy saw Q4 GDP growth slow to 4.5%, reflecting weak domestic demand, yet full-year growth met the target at 5%. With declining investments and retail sales falling short of expectations, the People's Bank of China has initiated credit-easing measures, suggesting a challenging environment for lasting economic recovery.
China's manufacturing activity expanded for the first time since March. December PMI is 50.1, higher than November's 49.2 and forecasts. Composite PMI climbed to 50.7, indicating broader economic improvement. Non-manufacturing PMI rose to 50.2, suggesting growth in services and construction.
China's consumer prices rose 0.2%, easing deflationary pressures. Producer prices dropped 2.1% for the third consecutive year. Manufacturing activity contracted significantly amid weak domestic and export demand. Trade truce between U.S. and China may alleviate export concerns. China plans to boost domestic consumption over the next five years.
Trump plans to lower fentanyl-linked tariffs on China. Discussion topics with Xi include tariffs and farmers' interests. Beijing's rare earth export controls may be under negotiation. Timing for concessions from China remains unclear.