November 25th Macroeconomic Index:[Economic and Geopolitical Trends] China responds to tariffs, the RMB exchange rate stabilizes, global IC sales grow, and tensions on the Korean Peninsula escalate

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International Crude Price Trend & Exchange Rate of RMB to USD Trend

Domestic News

1. China's response to the so-called 60% tariff: consumers and end-users in importing countries "pay" the bills

2. International Department of the Central Bank: The foreign exchange hedging ratio of enterprises from January to September was 27%

3. General Administration of Customs: Continue to deepen the comprehensive reform of customs supervision of cross-border e-commerce

4. National Energy Administration: As of the end of October, the country's cumulative installed power generation capacity increased by 14.5% year-on-year

5. International Department of the People's Bank of China: The RMB exchange rate will remain basically stable at a reasonable and balanced level

 International News

1. The cost of financing in the United States has soared, and it is expected to be under pressure by the end of the year

2. Kim Jong-un: The Korean Peninsula is in sharp confrontation, and war is about to break out

3. The price of rice in Japan rose to a new high in October

4. The United States and Russia confirmed that Russia notified the United States before launching the new medium-range missile

5. Institutions: Global IC sales increased by 12% quarter-on-quarter in the third quarter

Domestic News

1. China's response to the so-called 60% tariff: consumers and end-users in importing countries "pay" the bills

At the State Department's regular policy briefing, a reporter asked that Trump said during his campaign for U.S. President that he planned to impose 60% tariffs on China. How much impact will this have on China's exports? What do you think of this phenomenon? In this regard, Wang Shouwen, international trade negotiator and Vice Minister of the Ministry of Commerce, said that China's economy has shown very strong resilience, great potential and vitality. We are building a new development pattern with the domestic cycle as the mainstay and the domestic and international cycles reinforcing each other, and we have the ability to mitigate and resist the impact of external shocks.

2. International Department of the Central Bank: The foreign exchange hedging ratio of enterprises from January to September was 27%

Liu Ye, head of the International Department of the People's Bank of China, revealed at the regular policy briefing of the State Council held by the State Council New Office that in the first three quarters of this year, the amount of cross-border receipts and payments in RMB for trade in goods was 8.9 trillion yuan, a year-on-year increase of about 15%. The People's Bank of China (PBOC) and the State Administration of Foreign Exchange (SAFE) have taken multiple measures to guide enterprises and financial institutions to establish the concept of risk neutrality, and to guide financial institutions to actively provide exchange rate hedging services for small, medium and micro enterprises based on the principle of actual needs and risk neutrality. From January to September this year, the foreign exchange hedging ratio of enterprises was 27%, and more than 32,000 new exchange rate hedging "first accounts" were added, and the ability of small, medium and micro enterprises to avoid the risk of exchange rate fluctuations was further improved.

3. General Administration of Customs: Continue to deepen the comprehensive reform of customs supervision of cross-border e-commerce

Lin Shaobin, responsible people of the Comprehensive Business Department of the General Administration of Customs, said at the regular briefing of the State Council that cross-border e-commerce is now showing vigorous development, which has become a new driving force for the development of China's foreign trade. Customs will continue to deepen the comprehensive reform of customs supervision and management over cross-border e-commerce, strengthen the protection of intellectual property rights in the field of cross-border e-commerce, and promote the high-quality development of cross-border e-commerce. In addition, the Customs will continue to support the innovative development of bonded maintenance and mutual trade among the people cross the border, so as to further stimulate the vitality of foreign trade growth.

4. National Energy Administration: As of the end of October, the country's cumulative installed power generation capacity increased by 14.5% year-on-year

National Energy Administration: As of the end of October, the country's cumulative installed power generation capacity was about 3.19 billion kilowatts, a year-on-year increase of 14.5%. Among them, the installed capacity of solar power generation was about 790 million kilowatts, a year-on-year increase of 48.0%, and the installed capacity of wind power was about 490 million kilowatts, a year-on-year increase of 20.3%. In 1~10 months, the power supply projects of major power generation enterprises in the country completed an investment of 718.1 billion yuan, a year-on-year increase of 8.3%; The investment in power grid projects was 450.2 billion yuan, a year-on-year increase of 20.7%.

5. International Department of the People's Bank of China: The RMB exchange rate will remain basically stable at a reasonable and balanced level

Liu Ye, head of the International Department of the People's Bank of China, said at the State Council's regular policy briefing that the RMB exchange rate will remain basically stable at a reasonable and balanced level. Supporting factors include the stability of China's balance of payments, the more mature investors in the foreign exchange market, the more routine trading behavior, the significant increase in market resilience, and the recent introduction of a package of macro policies has significantly improved market expectations, and the economic stability and improvement trend has been further consolidated and strengthened.

International News

1. The cost of financing in the United States has soared, and it is expected to be under pressure by the end of the year

With just over a month left in 2024, traders are pouring into the U.S. funding market, pushing funding costs to worrying levels. Year-end overnight general mortgage repurchase agreements (i.e., Treasury collateralized loans) and repo rates based on mortgage-backed securities are soaring. With year-end regulatory pressures forcing some of the biggest players out of the market, the spike has led some Wall Streeters to brace for more volatility. This is the first time in years that concerns about the age of the child "are starting to be reflected in prices so early," said Jan Nevruzi, U.S. rates strategist at TD Securities. The overnight repo rate, which dates from Dec. 31 to Jan. 2, was as high as 5.60% last week and has since fallen back to 5.45%, according to Curvature Securities. This level is still higher than the 4.85% recorded earlier in the month. Meanwhile, the repo rate on mortgage-backed securities rose to 5.69% on Wednesday, up from 5.65%/5.55% on Nov. 15.

2. Kim Jong-un: The Korean Peninsula is in sharp confrontation, and war is about to break out

On the 21st local time, the weapons and equipment exhibition "National Defense Development-2024" opened in Pyongyang, , and Kim Jong-un, General Secretary of the Workers' Party of Korea and Chairman of the State Affairs Commission of the DPRK, attended the opening ceremony and delivered a speech. Kim Jong-un said that in 2024, when the United States and its allies were engaged in a vicious confrontation that exceeded the highest level, responded with a strong-on-strong and head-to-head confrontation posture and achieved important results in national defense development. In his speech, Kim Jong-un stressed that the Korean Peninsula has never been more dangerously and sharply confrontationed, and that a devastating nuclear war is on the verge of breaking out. But today's extreme situation on the Korean Peninsula is not the result of misunderstandings about adversaries.

3. The price of rice in Japan rose to a new high in October

Japan's Ministry of Internal Affairs and Communications released the country's national consumer price index for October, showing that rice prices rose 58.9% year-on-year, the largest increase since comparable data became available in 1971. This was mainly due to the decrease in the circulation of rice produced in 2023 and the increase in production costs and transportation costs for new rice in 2024.

4. The United States and Russia confirmed that Russia notified the United States before launching the new medium-range missile

In response to the Russian army's use of a new medium-range hypersonic missile codenamed "Hazel" on the 21st to carry out a joint strike on Ukraine's military industrial enterprises, US Deputy Defense Department spokesman Singh said on the same day that Russia notified the United States through the nuclear risk reduction channel before launch. Singh said that the medium-range hypersonic missile launched by the Russian side that day was developed based on the Russian RS-26 "Border" intercontinental ballistic missile. According to Russian media reports, Russian presidential press secretary Dmitry Peskov also confirmed on the 21st that before the launch of the "Hazelnut" missile, Russia had notified the United States in advance through the "Nuclear Risk Reduction Center".

5. Institutions: Global IC sales increased by 12% quarter-on-quarter in the third quarter

According to the latest data from the International Semiconductor Industry Association (SEMI), global IC sales increased by 12% quarter-on-quarter in the third quarter, mainly due to seasonal factors and strong demand for AI data center investment, and this growth trend is expected to continue into the fourth quarter, and global IC sales in the fourth quarter are expected to continue to grow by 10% compared with the third quarter. SEMI said that the recovery in the consumer, automotive and industrial sectors was slower in the third quarter, but the strong investment demand for AI data centers was the main driving force for IC sales growth in the third quarter. It is expected that IC sales are expected to increase by more than 20% this year, mainly driven by the improvement in memory chip prices driven by strong demand for data center storage.

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