This episode contains segments on:
- January producer and consumer price indexes;
- The United States imposed additional tariff on Chinese imports;
- State Council Executive meeting; and
- Rhodium Group report on China’s role in global supply chains;
From the Chamber’s side, the European Tour 2025 took place in Brussels between 3rd and 7th February.
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Read more:
China January price indexes (NBS)
https://www.stats.gov.cn/sj/zxfb/202501/t20250117_1958332.html
State Council Executive meeting
https://www.mofcom.gov.cn/xwfb/rcxwfb/art/2025/art_61cf09e39b644ca18e684a1d0f87d09a.html
Rhodium Group report on China’s role in global supply chains
https://rhg.com/research/china-and-the-future-of-global-supply-chains/
European Chamber EU Tour 2025
https://mp.weixin.qq.com/s/73Ub76dfYrqch7ZGYY6uDg
Transcript:
RUI: Hello and welcome to China ShortCuts,
MARIANN: the European Chamber’s weekly catchup on China’s business landscape.
RUI: This episode was recorded on 12th February 2025.
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RUI: In January, China experienced its 29th consecutive month of producer price deflation. Meanwhile, consumer prices rose at the fastest pace in five months, although the increase was still not substantial.
MARIANN: Producer prices dropped 2.3 per cent year-on-year in January. The rate of decrease was unchanged from the previous month. The National Bureau of Statistics attributed the fall in producer prices mainly to the fact that industrial production entered its off-season around the time of the Chinese New Year holiday. Conversely, the holiday was marked as the key reason behind the increase in consumer prices, with the index rising 0.5 per cent year-on-year, primarily due to an increase in the prices of food and services. Deflation is a key concern for businesses, as the appetite for investments drops in a deflationary environment. It is also an issue for China’s trade partners, as the combined problems of deflation and weak demand are externalised through exports to other markets, which is contributing to an increase in trade imbalances with many of China’s key partners.
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RUI: On 1st February, the United States government declared a national emergency and imposed tariffs on imports from Canada, Mexico, and China, citing issues like illegal immigration and drug trafficking. On 4th February, a 10 per cent tariff on Chinese imports to the US was implemented.
MARIANN: This additional tariff came on top of existing tariffs on Chinese imports, raising the average tariff rate to about 25 per cent.
China responded by filing a case with the WTO dispute settlement mechanism and announcing additional tariffs on certain US imports. These included a 15 per cent tariff on liquified natural gas and coal, and a 10 per cent tariff on crude oil, agricultural machinery, large-displacement cars, and pickup trucks originating from the US. China also announced export controls on 25 rare metal products and technologies, requiring licences for exports. Additionally, several US companies were added to China’s “entities list”, and an anti-monopoly investigation was initiated against Google.
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RUI: On 10th February, Chinese Premier Li Qiang chaired a State Council executive meeting, focusing on measures to boost domestic consumption and stabilise foreign investment in 2025.
MARIANN: During the meeting emphasis was placed on increasing household incomes, promoting wage growth, and strengthening consumption capacities. It identified areas with large consumption growth potential that could also have a spillover effect into other areas, including culture, sports and tourism. The meeting also stressed the importance of expanding inbound tourism consumption and supporting China’s consumer goods trade-in programme.
Additionally, the meeting recognised the significant role of foreign enterprises in job creation, export stabilisation, and industrial upgrading. It called for practical measures to stabilise and expand foreign investment, optimise the services sector opening-up pilot programme, and encourage foreign equity investment in China. The meeting urged equal treatment for domestic and foreign enterprises in government procurement and broader financing channels for foreign firms.
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RUI: According to a report published by the Rhodium Group on 4th February, driven by strong industrial policies and domestic imbalances, China’s role in global production and exports continues to expand. However, concerned about their own industries, jobs, and supply chain security, trading partners are pushing back, with some erecting trade barriers, while others prioritising the “de-risking” of strategic supply chains.
MARIANN: The report finds that the global market share of China’s manufacturing sector has grown significantly over the past decade, particularly in apparel, consumer electronics, solar photovoltaics and autos. While some production has moved out of China since the US-China trade war in 2017, China’s resilience as a producer of inputs and finished goods remains strong. Policy is now a key driver of diversification, with countries like India and Vietnam attracting significant investments. However, diversification often involves Chinese companies, complicating efforts to reduce overall dependency on China. The Rhodium Group also highlighted that China’s dominance in various supply chains has made it a global price maker in many industries, allowing it to reverse market share losses over time, especially in the context of overcapacity, high inventories, and declining producer prices. Conversely, relocation to smaller markets can create inflationary pressures that disrupt diversification momentum.
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RUI: The European Chamber held the Brussels leg of its European Tour 2025 between 3rd and 7th February. This was the first such tour since the 2024 European Union elections.
MARIANN: The delegation, led by Chamber President Jens Eskelund and comprising the Chamber’s vice presidents, board members, and senior working group representatives, held over 50 meetings during the week-long tour. They presented the Chamber’s key messaging and recent reports to European authorities, industry, and business associations. Meetings included sessions with four European Commissioners, three Heads of Cabinet, nine Director Generals, and the Chinese Ambassador to the European Union.
RUI: Visit the Chamber’s WeChat account to find out more about the meetings the delegation attended in Brussels and to keep up to date with the representatives continuing the tour into other European capitals.
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MARIANN: Thanks for listening, and don’t forget to tune in again next week.
RUI: In the meantime, please find useful links in the episode notes.