FALLING PRICES STOKE DEFLATION FEARS
China is experiencing deflation, or falling prices, in contrast with inflationary pressures in the U.S. The GDP deflator – the broadest measure of price changes – dipped to -0.8% in the last three months of 2024, compared to -0.5% the quarter before, meaning that deflation has intensified. The housing crisis has wiped out $18 trillion in household wealth, leaving many families reluctant to spend, yet factories keep churning out goods. Fitch Ratings fears deflation is becoming entrenched and has urged Beijing to boost demand. But Beijing also needs to address systemic problems like high youth unemployment, rising government debt, excess industrial capacity, and inefficient state industries. (Associated Press, March 4, 2025)
PREMIER LI QIANG CALLS FOR MORE STIMULUS
At the National People's Congress, Premier Li Qiang warned that "changes unseen in a century are unfolding across the world," and announced a "special action plan" to boost consumption. Li set a 5% growth target for 2025 and a projected budget deficit of around 4% of GDP. He said China would issue 1.3 trillion yuan ($179 billion) in ultra-long bonds this year, up from 1 trillion yuan in 2024, and will raise 500 billion yuan to re-capitalize major state banks. Local governments will issue 4.4 trillion yuan in debt, up from 3.9 trillion yuan in 2024. Li said 300 billion yuan would go to support consumer subsidies for EVs, appliances, and other home goods. Li's report mentioned the term "consumption" 31 times, up from 21 times last year. "For the first time, boosting consumption has been elevated to the top priority among 2025's major tasks, displacing technology from its usual leading position," said Tilly Zhang of Gavekal Dragonomics. (Reuters, March 5, 2025)
AMID U.S. "CHAOS," CHINA OFFERS "CERTAINTY"– FM WANG YI
Foreign Minister Wang Yi is casting China as a bulwark for peace and stability in a world thrown into chaos by President Trump. "We will provide certainty to this uncertain world. Great powers should shoulder their international obligations and fulfill their role as great powers. They should not be profit-oriented, let alone bullying," Wang said. He criticized the Trump administration for withdrawing from the World Health Organization and the Paris climate agreement, as well as other international pacts. (New York Times, March 7, 2025)
U.S. SOLDIERS ARRESTED FOR SELLING SECRETS TO CHINA
Two active-duty U.S. Army soldiers – Jian Zhao and Li Tian – stationed at Joint Base Lewis-McChord in Washington and a former soldier, Ruoyu Duan, are accused of selling military secrets to China. All three are charged with "conspiring to commit bribery and theft of government property;" Zhao is also accused of sending "national defense information" to an "unnamed individual not authorized to receive it." Zhao, who managed over $55 million worth of Army property, sold classified hard drives and sensitive information on the High Mobility Artillery Rocket Systems (HIMARS) to an agent in Changchun, Jilin. Tian sent Duan links to Google Drive accounts with information on U.S. military weapons systems, such as Bradley and Stryker fighting vehicles. "The defendants are accused of betraying our country, actively working to weaken America's defense capabilities and empowering our adversaries in China," said Attorney General Pamela Bondi. (CNN, March 7, 2025)
CHINA'S NEW SPY SATELLITE CAN SEE DETAILS FROM LOW ORBIT
China's new satellite, the synthetic aperture lidar (SAL), can capture minute details from more than 60 miles away. The SAL uses shorter, optical wavelengths rather than microwaves to produce images at 100x the resolution of existing spy telescopes. Chinese scientists tested the SAL across Qinghai Lake, Qinghai by placing reflective prisms 63.3 miles away from the system, which detected details as small as 0.07 inches and measured distances to within 0.61 inches. The test took place under near perfect weather and atmospheric conditions, with steady wind and limited cloud cover. (Live Science, March 11, 2025)
Want these sent to your inbox?
Subscribe
