Everything You Need to Know About China's Economy on Friday (June 20)
Your Daily & Trustworthy Updates on the Chinese Economy
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HOWDY! This is Tian in Beijing, welcoming you to your Friday edition of Everything You Need to Know About China’s Economy.
DRIVING THE DAY, OVER 24,000 FOREIGN‑INVESTED ENTERPRISES ESTABLISHED IN CHINA IN FIRST 5 MONTHS.
In the first five months of 2025, 24,018 new foreign-invested enterprises were established on the Chinese mainland, representing year-on-year growth of 10.4 percent, the Ministry of Commerce said on Friday.
From January to May, foreign direct investment (FDI) in the Chinese mainland totaled 358.19 billion yuan (about 49.96 billion U.S. dollars) in actual use, which was down 13.2 percent year on year, according to the ministry.
The actual use of FDI during the period came in at 91.52 billion yuan for the manufacturing industry, and at 259.64 billion yuan for the services industry.
The actual use of FDI in the country's high-tech industries reached 109.04 billion yuan, with FDI rising 146 percent in the e-commerce services sector, 74.9 percent in the aerospace equipment manufacturing sector, 59.2 percent in the chemical pharmaceuticals manufacturing sector, and 20 percent in the medical instrument and equipment manufacturing sector.
Investment from Association of Southeast Asian Nations (ASEAN) member states increased 20.5 percent year on year during the period, and investment from Japan rose 70.2 percent, per ministry data.
Investment from the United Kingdom, the Republic of Korea and Germany increased 60.9 percent, 10.3 percent and 7.1 percent during the same period, according to the data.
ALSO ON FRIDAY, CHINA PLEDGES CONTINUED FUNDING FOR CONSUMER GOODS TRADE-IN SUBSIDIES.
China has reaffirmed its support for the national consumer goods trade-in program, ensuring continued funding to sustain the government subsidy payment throughout 2025.
The program, a key part of the country's broader strategy to stimulate domestic consumption, encourages consumers to replace outdated products -- such as home appliances and vehicles -- with newer, more efficient models.
The central government has earmarked 300 billion yuan (41.84 billion U.S. dollars) in treasury bonds to support local authorities in implementing the program in 2025, doubling that of last year. Two tranches of the central funding, totaling 162 billion yuan, were issued in January and April to support first-half implementation, with further allocations planned for July and October to cover the third and fourth quarters of the year.
"Currently, about half of the annual subsidy budget has been utilized, a pace well within expectations," said an official with the National Development and Reform Commission.
MEANWHILE, CHINA UNVEILS OVER 3,200 NEW PROJECTS WORTH 3 TRLN YUAN TO PRIVATE CAPITAL.
The National Development and Reform Commission, China's top economic planning body, said on Friday that it had introduced over 3,200 new projects to private capital, with a total investment exceeding 3 trillion yuan (approximately 418.44 billion U.S. dollars).
These projects are concentrated in key sectors such as transportation, energy, water conservancy, new infrastructure, urban infrastructure, environmental protection, warehousing and logistics, and manufacturing.
Next, the commission will accelerate the improvement of the long-term mechanism for private enterprises to participate in major national projects.
It will also encourage local authorities to continuously present more projects to private capital, aiming to further stimulate the vitality of private investment.
IN TODAY'S FINANCIAL MARKET，
China's one-year loan prime rate (LPR), a market-based benchmark lending rate, came in at 3 percent on Friday, unchanged from the previous month.
The over-five-year LPR, on which many lenders base their mortgage rates, also remained unchanged from the previous reading of 3.5 percent, according to the National Interbank Funding Center.
These latest developments follow last month's 0.1-percentage-point decline in market-based benchmark lending rates, the first decline this year.
LPRs reflect the level of financing costs for households and businesses, with lower rates meaning less burdens for borrowers and stronger support for economic activity.
Latest data shows that the weighted average interest rate for new business loans fell to about 3.2 percent in May, down 50 basis points from a year earlier, while the rate for new personal mortgages dropped to around 3.1 percent, a decrease of 55 basis points.
China has vowed to adopt a moderately loose monetary policy in 2025, according to the government work report.
Chinese stocks closed lower on Friday, with the benchmark Shanghai Composite Index down 0.07 percent to 3,359.90 points.
The Shenzhen Component Index closed 0.47 percent lower at 10,005.03 points.
The combined turnover of these two indices stood at 1.07 trillion yuan (about 148.92 billion U.S. dollars), down from 1.25 trillion yuan on the previous trading day.
Shares in the media, gas, military, oil and precious metals sectors suffered the most, while those related to the liquor, bank, solid-state battery and water conservancy sectors rallied.
The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, lost 0.84 percent to close at 2,009.89 points on Friday.
The cross-border payment connect linking users in the Chinese mainland and Hong Kong will begin operations on June 22, the People's Bank of China (PBOC), the country's central bank, said on Friday.
By linking the mainland's Internet Banking Payment System and Hong Kong's Faster Payment System, the payment connect will support participating institutions to provide efficient, convenient and safe cross-border payment services for residents in both the mainland and Hong Kong, the PBOC said in a statement.
The payment connect system is another important measure unveiled by the central government to support Hong Kong's development, enhance people's livelihoods, and promote cooperation between the mainland and Hong Kong, according to the statement.
Through the system, users will be able to initiate cross-border remittances in renminbi and Hong Kong dollars in both locations via mobile and online banking channels, improving the efficiency of cross-border money transfers.
Hong Kong stocks close 1.26 pct higher
Hong Kong's stock market ended higher Friday with the benchmark Hang Seng Index up 1.26 percent to close at 23,530.48 points.
The Hang Seng China Enterprises Index rose 1.38 percent to end at 8,527.07 points, and the Hang Seng Tech Index rose 0.88 percent to end at 5,133.14 points.
Chinese yuan strengthens to 7.1695 against USD Friday
The central parity rate of the Chinese currency renminbi, or the yuan, strengthened 34 pips to 7.1695 against the U.S. dollar Friday, according to the China Foreign Exchange Trade System.
In China's spot foreign exchange market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day.
China's benchmark interbank gold prices lower Friday
According to the China Foreign Exchange Trade System, the benchmark price for gold that is 99.95 percent pure or above stood at 779.75 yuan per gram, 3.49 yuan lower than the previous trading day.
The price for gold that is 99.99 percent pure or above was down 4.44 yuan from the previous trading day to 777.41 yuan.
AT THE END OF TODAY'S SHARING, LET'S TAKE A LOOK AT YOUR DAILY FUTURES:
Iron ore futures closed higher on Friday in daytime trading at the Dalian Commodity Exchange (DCE).
The most active iron ore contract for September 2025 delivery gained 6.5 yuan (about 91 U.S. cents) to close at 703 yuan per tonne.
On Friday, the total trading volume of 12 listed iron ore futures contracts on the exchange was 502,435 lots, with a turnover of about 35.17 billion yuan.
Cotton futures closed higher Friday in daytime trading on the Zhengzhou Commodity Exchange (ZCE).
The most active cotton contract for September 2025 delivery gained 5 yuan (about 69.74 U.S. cents) to close at 13,495 yuan per tonne.
On Friday, the total trading volume for six listed cotton futures contracts on the ZCE was 197,793 lots with a turnover of 13.35 billion yuan.
No.1 soybean futures closed higher on Friday in daytime trading at the Dalian Commodity Exchange.
The most active No.1 soybean contract for September 2025 delivery gained 32 yuan (about 4.46 U.S. dollars) to close at 4,259 yuan per tonne.
On Friday, the total trading volume of six listed No.1 soybean futures contracts on the exchange was 154,450 lots, with a turnover of about 6.55 billion yuan.
Sugar futures closed higher Friday in daytime trading on the Zhengzhou Commodity Exchange.
The most active sugar contract for September 2025 delivery gained 58 yuan (8.09 U.S. dollars) to close at 5,720 yuan per tonne.
On Friday, the total trading volume for six listed sugar futures contracts on the ZCE was 352,079 lots with a turnover of 19.98 billion yuan.
About the Newsletter:
Ran by TIAN Dongdong, this newsletter features daily and trustworthy content on China's economy. Having worked in Brussels, London, Cairo, and Tripoli for Chinese media as correspondent for several years, TIAN is now based in Beijing.