China to reprise stimulus, but with shifted focus

Kia ora,

Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the international edition from Interest.co.nz.

Today we start with news the global economy is ticking over normally, despite the weekend theatrics.

In the coming week there is very little official data released in New Zealand. But in Australia we will get the November CPI readout, building permit data, and the merchandise trade result, both also for November. There are widespread expectations that this data will be good.

Elsewhere, it is back to a full economic schedule in most places, all as Trump's colonising adventure in Venezuela takes shape. It is successfully distracting the real world from his domestic misfires, as he awaits the US Supreme Court's decision on tariffs. The US will release a bunch of labour market data (non-farm payrolls, JOLTs, and the now more important private payroll data - now Trump has yes-men controlling the official data flows). There will also be PMIs from the ISM this week, and the University of Michigan sentiment survey for January.

Canada will also release jobs data.

China will be releasing CPI and PPI data this week, and the private services PMI will drop sometime too.

India will post its latest GDP update this week. In Japan, it will all be about corporate earnings reports.

In Europe, the spotlight will be on inflation rates for the Eurozone and its largest economies, in addition to their jobless rates and major manufacturing gauges from Germany and Switzerland.

Over the weekend, China unveiled early investment plans for 2026, signaling a renewed push to bolster China's economic growth through infrastructure spending. They are frontloading their stimulus. And their 2025 consumer goods subsidy programs will extend into 2026.

China's property sector drag isn't going away, despite official ambivalence to the issue now. But some heavy hitters are calling for more forceful rescue plans.

Meanwhile, Chinese president Xi said he expects 2026 growth to come in close to 5%.

China has tightened silver export controls from January 1, widening restrictions on a commodity now seen as vital to many industries. This signaled tightening is behind the recent sharp run-up in price. Currently more than 60% of global production comes from China.

China's official PMIs both moved from contraction in November to a steady-state in December, an unexpected improvement for both the factory sector, and their services sector - although neither are actually expanding yet. The gains are all from internal demand however, a shift Beijing is keen to encourage. The factory improvement is notable because it ends eight consecutive monthly declines.

The private Markit/RatingDog China factory PMI unexpectedly rose as well in December from November’s four-month low, besting market forecasts. This version also relied on better internal demand, offsetting weaker export demand.

South Korea's exports hit a record US$710 bln in 2025, the first time they have rosen above US$700 bln. In December, their exports jumped +13.4% from a year earlier, the seventh consecutive month of growth and the strongest increase since July 2024. This was an acceleration from an +8.4% November rise.

In India, they still had good factory growth in December, but a notable slowing of new orders has them on edge to end the year.

In the US initial jobless claims rose marginally and by less than expected last week. New orders in American factories fell for first time in a year in December, but output growth remains solid. Tariffs continue to push up prices at an elevated pace, embedding inflation. Higher prices and weaker demand discouraged purchasing activity, just the ingredients for stagflation.

Eyes are now turning to the US Supreme Court decision on the legality of Trump's tariff-taxes. It is due sometime this month. Trump himself is nervous about the ruling.

In Europe, factory output declined for first time since February 2025 as their manufacturing PMI contracted in December. New orders fell. The overall situation was dragged down by Germany.

In Australia late last week, Cotality said that national home values recorded the smallest gain in five months in December, with overall value rising just +0.7% in the month. Sydney and Melbourne were the biggest drag on the headline growth outcome with values sliding -0.1% lower. Brisbane, Adelaide and especially Perth continued their strong gains.

The UST 10yr yield is now just on 4.19%, unchanged from this time Saturday. 

The price of gold will start today at US$4330/oz, and up +US$17 from Saturday. Silver is up to US$72.50/oz, and platinum is back up to US$2143/oz.

American oil prices are up +50 USc from Saturday at just under US$57.50/bbl, while the international Brent price is now at just over US$60.50/bbl.

The Kiwi dollar is up +10 bps from Saturday, now at just under 57.7 USc. Against the Aussie we are down -10 bps at 86.2 AUc. Against the euro we are unchanged at 49.2 euro cents. That all means our TWI-5 starts today just over 61.7, and little-changed from Saturday.

The bitcoin price starts today at US$91,343 and up +1.3% from this time Saturday. Volatility over the past 24 hours has been low at just over +/- 0.9%.

You can get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston and we’ll do this again tomorrow.