The Roundup – December 2025

Heavyweight Hurdles

Despite steep tariffs, which saw shipments to the US plummet by 28.6% from a year earlier, total Chinese exports increased in November. Efforts to diversify its trading partners resulted in increased exports to markets including Europe, Australia and Southeast Asia.

Beijing urged other global players to follow suit in rejecting rising protectionism and uphold free trade. The manufacturing heavyweight also appealed to the IMF, World Bank and World Trade Organisation to enhance global governance citing the growing use of import levies.

With one month to go, China posted its first $1 trillion trade surplus for the year - a direction that alarmed other economies. On a state visit, France’s President appealed to Beijing for cooperation on curbing unsustainable global trade imbalances and widening trade deficits.

Simultaneously, the European Commission looked to improve their resilience against dumped goods and unfair subsidies which have undermined Europe’s competitiveness, and Mexico’s Congress endorsed tariff increases on Chinese goods, to spur domestic production.

In the UK, enhancements to the Trade Remedies system were endorsed in efforts to address unfair international trade behaviours more swiftly and protect British producers and manufacturers, as concerns around dumping of goods (once destined for the US) ramped up.

Meanwhile the International Monetary Fund called on Beijing to transition into its next phase of economic development, pivoting the $19 trillion nation away from its dependence on exports into an economy fuelled by domestic household spending.

The IMF cautioned that the size of China’s economy (which accounts for around 30% of global GDP) and level of exports are contributing factors to global trade tensions. However, the switch to a consumption led market will require both time and fiscal support.

November’s factory and retail data highlighted the transitional challenge facing Beijing, as manufacturing output and sales growth rose at a slower pace than anticipated. Sales grew at 1.3% for the month, compared to 2.9% in October and against projections of 2.8%.

The Politburo, a top decision-making body of China’s ruling party, pledged more measures to stimulate domestic demand, but a dilapidated property sector is limiting efforts, with estimates of around 70% of Chinese household wealth tied up in property.

Mixed Directions

While the US Federal Reserve’s 0.25% trim to interest rates was widely anticipated, the division among the committee was notable - two members voted for no change, while one called for a 0.50% cut -creating uncertainty around the direction of future interest rates.

Contributing to the divergence was the available data, which provided a mixed read on the US economy. For example, labour market data (job openings and unemployment) showed a stagnant “no-hire, no-fire” trend, reflecting employer unease around the outlook.

Elsewhere the new RBNZ Governor undertook a series of media engagements aimed at clarifying the Bank’s perspective and the potential direction for future monetary policy, following the counter-intuitive rise in mortgage rates off the back of the last rate cut.

In contrast, the trajectory for the European Bloc is more clear, with the ECB noting monetary policy is “in a good place” having been on hold since June. The bloc has been more resilient than expected, even against the current backdrop of US tariffs and Chinese oversupply.

One of the last movers to reduce cash rates, the Reserve Bank of Australia now looks likely to be one of the first to increase them. The RBA held interest rates unchanged (again) and ⁠ruled out further policy easing, instead warning of potential increases if inflation persists.