Key TakeawaysCryptocurrencies staged a significant rebound after a brutal weekend selloff, with major digital assets recovering as President Trump moved to ease U.S.-China trade tensions, which had wiped billions off crypto valuations.Taiwan unveiled its "T-Dome" air defense system, a multi-layered defense initiative aimed at enhancing interception success and integration against growing military threats from China, with plans for increased defense spending and collaboration with U.S. firms.US-China trade t ...

China Economics China Export Tracker (23): Risks Rising for US-China Relations? CITI'S TAKE V i e w p o i n t | 09 Oct 2025 22:50:55 ET │ 9 pages We update our high-frequency trackers of Chinese exports up to October 8th. China exports seem to have had a business-as-usual Golden Week (Oct 1-8), picking up from the earlier trough amid typhoon events. China's MoFCOM tightened its export controls further back from holiday, perhaps in response to USTR's port fees and BIS's "Affiliates Rule". We believe the US a ...

Group 1 - U.S. President Donald Trump warned of potential 200% tariffs on China if exports of rare-earth magnets are restricted, indicating a fragile trade truce between the U.S. and China [2][3] - China's exports of rare-earth magnets to the U.S. surged by 660% in June compared to the previous month, with a 76% increase in July, highlighting China's dominance in the global supply of these materials [3][4] - The U.S. relies heavily on rare-earth magnets for its manufacturing sectors, including automotive, electronics, and renewable energy, giving China significant leverage in trade negotiations [4][6] Group 2 - A trade framework agreed upon in June included easing controls on Chinese rare-earth exports and a rollback of some American tech restrictions, indicating a potential path toward improved trade relations [5][6] - The temporary truce between the U.S. and China is set to expire in mid-November, with ongoing bilateral engagement being crucial for its sustainability [6][7] - Upcoming meetings between senior Chinese trade negotiator Li Chenggang and U.S. officials may lay the groundwork for higher-level negotiations to address trade tensions [6][7]

Investment Rating - The report does not explicitly state an investment rating for the industry or specific companies covered. Core Insights - The impact of China's rare-earth export ban is significant, affecting key Asian automakers like Suzuki and Ford, with production halts reported [1][5] - The sentiment around BYD has improved, with investors noting a bottoming out in sentiment, while concerns remain for Geely and Great Wall Motor [1][12] - The Indian defense sector is poised for growth, with expectations to increase defense spending to 2.5% of GDP by FY30, indicating a potential doubling of defense spending [1][11] - The EU building materials sector is showing signs of improvement, driven by positive factors such as increased defense spending and a potential recovery in residential construction [1][13] Detailed Highlights - **Japan Auto**: Suzuki halted production of its Swift model due to the rare-earth export ban but resumed operations shortly after, indicating that the situation may not be as severe as initially thought [1][5] - **China Auto Feedback**: Pricing competition has moderated, and BYD's sales volume has responded positively without significant price cuts, improving investor sentiment [1][10][12] - **Indian Defense**: The Ministry of Defense's commentary suggests that conditions are aligning for a significant increase in defense spending, attracting investor interest in various defense companies [1][11] - **EU Building Materials**: The sector is experiencing a strong move, with cement shares leading the way, supported by positive results from companies and a firming sentiment for construction recovery [1][13] Sector Key Newsflow - US auto suppliers are urging immediate action to address China's rare earth restrictions [1][13] - Suzuki's production of the Swift is set to return to normal from June 16 [1][13] - Chinese officials have summoned EV executives to discuss self-regulation in the ongoing price war [1][13] - BYD plans to nearly triple its dealer network in South Africa, reflecting its growth strategy [1][13] - China's NEV retail sales increased by 30% year-on-year in May, indicating strong market demand [1][13]

Investment Rating - The report maintains an "Overweight" rating on Chinese stocks within a regional context, favoring domestic-oriented sectors such as Internet, Services, and Banks/Property [2][18]. Core Insights - The US and China have agreed to a 90-day truce in retaliatory tariffs, significantly reducing the effective US tariff rate on Chinese goods from 107% to 39% and on US exports to China from 144% to 30% [2][3]. - Following the tariff rollbacks, Chinese equities have fully recovered from a 13% drawdown, with major indices trading 2-4% above early-April highs [2][6]. - Goldman Sachs has revised its GDP growth forecasts for both the US and China, increasing China's real GDP growth expectation for 2025 from 4% to 4.6% [10][12]. - The report projects MSCI China and CSI300 indices to reach targets of 84 and 4,600 respectively over the next 12 months, indicating potential upside of 11% and 17% [12][13]. Summary by Sections Tariff Developments - The US and China announced a significant rollback of tariffs, with the US effective tariff rate on Chinese goods now at 39% [3][4]. - The extent of the tariff de-escalation was larger than anticipated, with China still facing the highest tariff rates among major US trading partners [3][4]. Market Reactions - Following the tariff announcements, both US and Chinese equities saw positive reactions, with the S&P 500 and MSCI China rallying over 3% [6][10]. - Chinese stocks have outperformed other global markets year-to-date, returning 17% compared to 6% for MSCI EM ex-China and 3% for DM indices [6][10]. Economic Forecasts - Goldman Sachs has adjusted its economic forecasts, raising the US GDP growth forecast for 2025 by 0.5 percentage points to 1% and reducing recession odds to 35% [10][12]. - For China, the real GDP growth forecast for 2025 has been increased to 4.6%, with a slight upward revision for the next year as well [10][12]. Investment Themes - The report emphasizes investment trends that are likely to persist, including a focus on Domestic Stimulus Beneficiaries, EM exporters, and AI proxies [2][18]. - The report suggests that self-help mechanisms have been activated in China to counteract external demand uncertainties, reinforcing the preference for domestic-oriented sectors [18].