China Unveils Digital Economy Action Plan For 2025

Cryptocurrency

Summary:

Announced by National Bureau of Statistics, targets GDP growth.Digital economy core industries exceed 10% of GDP.Part of China's digital transformation strategy.

China Unveils Digital Economy Action Plan for 2025

The National Bureau of Statistics of China announced the "Action Plan for Digital China Construction 2025" on May 16, 2025, aiming for the digital economy's core industries to comprise over 10% of GDP.

This initiative is significant as it integrates into China's broader strategy to enhance its digital economy, potentially driving considerable economic changes and market adaptations.

The "Action Plan for Digital China Construction 2025" outlines that the digital economy's core industries should surpass 10% of GDP. This initiative signifies a substantial push in China's digital transformation strategy. On May 16, 2025, the National Bureau of Statistics released this plan. While specifics about financial allocations or detailed objectives remain limited, the strategy inherently promotes digital integration within the economy.

China's government initiatives consistently show a focus on digital and data advancement. Recently, initiatives have included developing systems for public, corporate, and personal data, expected to be operational by 2029. The action plan complements such ongoing efforts.

The added value of core digital economy industries will account for more than 10% of GDP. — Kang Yi, Commissioner, National Bureau of Statistics of China

The announcement affects many, from industry leaders to policymakers, as digital strategies are essential for future economic growth. Core digital industries becoming a significant GDP part highlights the anticipated economic shift. Financial implications include increased digital infrastructure investment and innovation within core sectors.

Potential outcomes might include regulatory adjustments and technological advancements as China pursues digital transformation. Historical trends suggest that increased digital presence can enhance productivity and innovation across industries. Further analysis in the coming months will likely determine the broader impacts and shifts in digital policies.

Source: CryptoSlate

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Gerik

China–U.S. Trade War

Economic

China Reduces U.S. Debt Holdings, Ceding Rank to the U.K.

According to data released by the U.S. Department of the Treasury, China offloaded $27.6 billion worth of long-term U.S. Treasury bonds in March 2025, reducing its total holdings to $765.4 billion. This move has allowed the United Kingdom—whose holdings rose to $779.3 billion—to surpass China for the first time in over two decades, becoming the second-largest foreign holder of U.S. debt after Japan.

This symbolic shift marks a broader change in the global financial hierarchy, as geopolitical tensions and monetary policy recalibrations reshape traditional investment flows. Japan maintained its lead with $1.13 trillion in holdings, increasing for the third consecutive month. Other countries such as Canada ($426.2 billion) and Belgium ($402.1 billion) also boosted their Treasury portfolios, though analysts note that some of Belgium’s holdings may actually reflect custodial accounts held on behalf of China.

Contrasting Trends: Global Inflows vs. Strategic Divestment

Despite China’s divestment, foreign appetite for U.S. Treasuries remains robust. In total, foreign holdings of U.S. government debt rose by $233.1 billion in March to a record $9.05 trillion—the second straight month of gains. This trend underscores the continuing appeal of U.S. bonds as a haven asset, even as political and economic uncertainties mount.

The divergence in behavior between China and other creditors suggests a strategic recalibration rather than a loss of confidence in U.S. fiscal instruments. While institutional investors and hedge funds—such as those operating through the Cayman Islands, which increased holdings to $455.3 billion—continue to treat Treasuries as a safe asset, China appears to be signaling dissatisfaction with U.S. policy, or hedging against future geopolitical and monetary instability.

Trade Tensions and Currency Volatility Behind the Sell-Off

China’s bond sell-off comes against a backdrop of rising U.S.–China trade tensions. In April, the U.S. Treasury market experienced notable volatility following President Trump’s threats to impose new tariffs. The U.S. dollar weakened sharply, while the yield on 10-year Treasuries fluctuated from 3.86% to 4.59%—a clear indication of investor anxiety over inflation and policy unpredictability.

Although a temporary thaw in trade relations has followed recent bilateral talks and new trade agreements—most notably with the U.K.—the broader trajectory suggests that China is actively reducing its exposure to U.S. sovereign debt as a geopolitical hedge.

Strategic Diversification or Political Signaling?

The reduction in China’s holdings may serve dual purposes: diversifying its foreign exchange reserves away from dollar-dominated assets and sending a political message to Washington amid heightened strategic rivalry. This move also coincides with Beijing’s broader efforts to internationalize the renminbi and shift its reserves into alternative stores of value, such as gold and infrastructure-related investments under the Belt and Road Initiative.

Analysts also point to China’s push for a stronger domestic financial architecture and increased holdings in hard assets, which may explain part of its diminished appetite for U.S. bonds.

Financial Realignment Reflects Rising Strategic Friction

China’s decision to sell tens of billions in U.S. Treasuries amid intensifying trade disputes with Washington reflects more than portfolio management—it underscores a deeper shift in global financial power dynamics. As the U.S. continues to attract foreign capital through the sheer weight of its debt markets, China is charting a more cautious, diversified path in response to an increasingly fragmented geopolitical order.

The implications are far-reaching. While immediate market disruption may be limited due to persistent global demand for U.S. debt, sustained divestment by China could gradually reshape the Treasury market’s underlying structure and raise questions about the long-term sustainability of America’s external financing model.

Source: Bloomberg

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

Fed Moves Toward Workforce Restructuring in Long-Term Efficiency Push

On May 16, Federal Reserve Chairman Jerome Powell issued an internal memo announcing a significant restructuring initiative that will see the central bank reduce its workforce by approximately 10% in the coming years. The decision, affecting up to 2,400 positions out of a current workforce of nearly 24,000, is being framed as part of a strategic plan to modernize operations and optimize institutional effectiveness.

Although the Fed operates independently from congressional appropriations—funded instead by income from securities holdings and service fees to supervised banks—Powell emphasized the importance of organizational review as a “healthy and necessary” process for any institution with long-term responsibilities.

Voluntary Exit Program and Operational Streamlining

The centerpiece of the plan is a “voluntary deferred separation program” targeted at eligible employees at the Fed’s Board of Governors in Washington, D.C. While this soft approach avoids immediate layoffs, it reflects a shift toward leaner operations and long-term cost rationalization.

Powell has tasked Fed leadership with aligning departmental functions, improving workflow efficiency, and assessing the optimal scale of the organization to meet statutory mandates effectively. The focus will be on maintaining agility in a complex economic environment and ensuring that resource allocation reflects evolving priorities.

The initiative mirrors broader efforts by the Trump administration to downsize federal operations. Though the Fed is technically outside the executive branch’s budgetary control, its alignment with themes from the Government Efficiency Office—led by Elon Musk—is notable in tone and timing.

Implications for Fed Structure and Future Readiness

According to its 2023 annual report, the Federal Reserve employs approximately 23,950 individuals nationwide, including around 3,000 in Washington and over 20,000 across its 12 regional Reserve Banks. The 10% reduction translates to a significant contraction in human resources, though phased implementation and voluntary participation are expected to mitigate disruption.

Powell also framed the program as an opportunity for employees to pursue career transitions, while enabling the Fed to reconfigure its internal capacity for future challenges—especially as it navigates a volatile macroeconomic landscape marked by rising debt, policy uncertainty, and global financial realignments.

Strategic Downsizing with an Eye on Institutional Agility

The Federal Reserve’s plan to cut 10% of its workforce signals a new chapter in institutional self-examination and modernization. While largely symbolic of broader federal downsizing themes, the move reflects Powell’s commitment to ensuring the Fed remains responsive, efficient, and capable in its evolving role within the U.S. and global financial system.

In an era where central bank policies are under intense scrutiny—ranging from balance sheet expansion to financial supervision—this internal recalibration aims to bolster credibility, operational focus, and long-term resilience. Whether other independent financial institutions follow suit remains to be seen, but the Fed’s initiative sets a precedent for proactive governance reform.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

EU Signals Strategic Shift Away from Investment Pact with China

During a recent forum discussion with Chinese officials, Marjut Hannonen, the EU Delegation’s Head of Trade in China, firmly dismissed the possibility of resuming negotiations on the long-stalled Comprehensive Agreement on Investment (CAI). According to Hannonen, the EU’s priority lies not in reopening the deal but in addressing the widening structural issues plaguing EU–China economic relations.

Her remarks follow a cooling in bilateral tensions after China lifted sanctions on several EU parliamentarians and institutions—a move widely interpreted as an attempt to reopen CAI talks. However, Hannonen was unequivocal in her response: "There is no intention on the EU’s part to do anything with the CAI. It’s not even under consideration."

A Legacy of Stalled Engagement and Rising Distrust

The CAI, initially hailed as a landmark agreement in 2020, lost momentum after the European Parliament froze its ratification in 2021 in response to China’s sanctions related to accusations of human rights violations in Xinjiang—claims which Beijing denies. The diplomatic standoff has since left the agreement dormant, and current EU rhetoric signals that its revival is politically untenable.

Hannonen highlighted a broader deterioration in trade relations over the past two decades, attributing this trend to rising barriers against European firms and asymmetric market access in China. While some sectors like services show promise, the overall trade relationship is strained by deeper systemic imbalances.

Subsidies and Overcapacity Emerge as Core Issues

A central grievance from the EU is China’s aggressive subsidization of its domestic industries. This policy has triggered concerns across multiple sectors, especially in areas where Chinese industrial output is flooding European markets with underpriced goods, such as electric vehicles and solar panels.

The problem, according to Hannonen, is not merely national but global: “Overcapacity is a severe and worsening issue. Instead of addressing it, China is doubling down on production, further destabilizing the international trade environment.” The EU has responded with defensive measures, such as imposing tariffs on Chinese EV imports in 2024, prompting retaliatory actions from Beijing.

These developments underscore the EU’s strategic pivot from negotiation to protectionism, aimed at shielding its own industries from systemic disadvantages.

China Calls for Dialogue but Criticizes Western Trade Policies

Responding to the EU's tough stance, Li Jian, Director-General for European Affairs at China’s Foreign Ministry, acknowledged existing bilateral frictions but called for constructive dialogue. He warned against policies of economic coercion and unilateralism—implicitly criticizing the U.S., and by extension, likeminded allies for contributing to global instability.

His call for China and Europe to exercise “responsible leadership” reflects Beijing’s diplomatic attempt to maintain engagement while resisting perceived Western encirclement. However, without structural reforms from China or a clear shift in EU strategy, dialogue alone appears insufficient to bridge the divide.

Strategic Decoupling Gains Ground

The EU’s unequivocal dismissal of CAI revival reflects a maturing recognition that trade liberalization with China may no longer be strategically viable under current conditions. Deepening subsidy tensions, persistent overcapacity, and political mistrust have created a landscape where multilateral investment frameworks struggle to gain traction.

In this evolving context, the EU appears to be recalibrating its approach—prioritizing defensive economic measures, targeted engagement, and issue-based cooperation rather than sweeping trade deals. Unless China addresses the structural concerns raised, particularly in industrial policy and human rights, the CAI will likely remain shelved, a relic of a geopolitical climate that no longer exists.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Damon

Political

President Donald Trump said the US had presented Iran with a proposal over Tehran’s nuclear ambitions and that the country’s negotiators needed to move soon on the offer as talks intensify.

“They have a proposal, more importantly they know they have to move quickly or something bad — something bad’s going to happen,” Trump told reporters aboard Air Force One as he returned to Washington from a visit to the Middle East.

The president did not provide details on the proposal that follows talks being led by his special envoy, Steve Witkoff, and mediated by Oman. The most recent session was Sunday.

A major sticking point has been whether the US would accept Iran keeping some kind of civil nuclear program as part of the deal, and US officials have given conflicting messages on the levels of uranium enrichment they would accept.

Trump has repeatedly threatened military action against Iran if Tehran does not reach a deal to limit its atomic work in exchange for relief from crippling US sanctions. Iran says its program is peaceful but it’s long faced suspicion that it could be weaponized.

Iran’s lead negotiator, Foreign Minister Abbas Araghchi, repeated his insistence that Iran retain some enrichment capacity in comments late Thursday, while citing “contradictory” negotiating positions from the US.

“What the parties to the negotiations say in the media is not the same as what they say behind closed doors,” he said.

Tehran also sent negotiators to Istanbul on Friday to discuss nuclear issues and sanctions with the European signatories of the 2015 nuclear deal that Trump withdrew from in his first term.

“We will meet again if necessary to continue talks,” Deputy Foreign Minister Kazem Gharibabadi said on X, adding that Iran, the UK, France and Germany were “determined to sustain and make the best use of diplomacy.”

During his Mideast visit, Trump suggested that the US is moving closer to an agreement to curb Iran’s nuclear activities even as he has sought to ramp up pressure on the country, warning that his offer will not remain on the table indefinitely.

Source: Yahoo Finance

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

China–U.S. Trade War

Trump Administration Prepares Tariff Wave Amid Stalled Global Negotiations

In a bold and decisive statement from Abu Dhabi, U.S. President Donald Trump announced on May 16 that his administration will begin imposing new tariffs on multiple trading partners within the next 2–3 weeks. The announcement reflects the administration’s frustration with the logistical impossibility of negotiating trade agreements simultaneously with up to 150 countries.

According to Trump, the Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick will soon notify foreign governments of revised tariff rates. He emphasized the U.S. would remain “fair” but firm in enforcing new trade terms, a stance that sharply contrasts with multilateral trade frameworks.

Diplomatic Timeframe Narrowing: From Pause to Penalty

The decision follows a 90-day tariff suspension announced on April 9, which was intended to allow time for trade negotiations. However, with the grace period nearing its end on July 8, few agreements have been finalized. Only two frameworks—one with the United Kingdom and a second with China—have been formally announced so far, negotiated in Geneva by senior U.S. officials.

Meanwhile, over 100 countries have expressed interest in commencing talks, creating a bottleneck that U.S. trade officials admit they cannot realistically resolve within the timeframe. As a result, countries that fail to reach a deal may face retaliatory tariffs as high as 50%, a threshold previously mentioned by Trump as a potential ultimate goal by mid-2026.

Tariff Uncertainty Roils Global Trade Landscape

The Trump administration’s ambiguous position on tariff levels is generating widespread market anxiety. While the U.S. currently maintains a basic 10% import tariff for most goods, some sectors already face significantly higher rates. Notably, the President has hinted that many countries will soon be subject to rates far exceeding the 10% “floor” cited by Commerce Secretary Lutnick.

The recent trade deal with the U.K. allows British goods to enter at the 10% rate, but Trump declared that such "generous terms" would not extend to others. For countries like Vietnam, Japan, India, and the EU, which are still in negotiations, the looming threat of elevated tariffs presents significant economic and diplomatic risks.

Fitch Ratings and Investor Concerns Amplify Policy Volatility

According to Fitch Ratings, the U.S. average tariff remains elevated at 13%—far above the pre-Trump baseline of 2.3%—even after temporary rollbacks tied to talks with China. While this is down from 23% in early April, the current level still represents a significant departure from historical norms and global trade expectations.

This persistent unpredictability is sparking strong reactions from financial markets. In recent weeks, stock prices have swung violently in response to mixed messages from the Trump administration—oscillating between aggressive rhetoric and negotiation overtures. Economists now estimate a 50% chance of a U.S. recession, citing the disruptive effects of trade policy as a key risk factor.

Domestic Impact: Businesses and Consumers Brace for Fallout

Beyond geopolitics, the uncertainty surrounding Trump’s trade policies is weighing heavily on U.S. businesses and consumers. Unpredictable tariffs complicate supply chains, delay procurement decisions, and create pricing volatility in both imported goods and domestic alternatives.

While some firms are attempting to frontload imports or reconfigure supply chains, many face rising costs that will eventually pass through to consumers. The short-term benefit of tariff suspensions has failed to provide the stable planning horizon that industries need to manage risk.

Unilateral Trade Escalation Risks Global Retaliation

As the July 8 deadline approaches, the Trump administration’s shift toward broad-based tariffs appears imminent. The lack of clarity about specific tariff levels, combined with the collapse of a multilateral strategy, introduces significant volatility into global trade dynamics. Though some deals may still materialize, the broader pattern suggests a return to the “America First” doctrine that prioritizes leverage over cooperation.

With key U.S. trading partners still awaiting formal terms, and global investors increasingly wary, the coming weeks may mark a turning point in the post-pandemic trade order—one shaped more by bilateral pressure than by rules-based negotiation. Whether this yields stronger U.S. economic outcomes or triggers a wave of global retaliation remains a question markets and policymakers are watching closely.

Source: Yahoo Finance

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

U.S. Creditworthiness Takes a Hit Amid Mounting Fiscal Pressures

In a move that caught markets off guard, Moody’s Investors Service downgraded the U.S. credit rating from Aaa to Aa1 on May 17, 2025, citing concerns over the sustainability of the country’s ballooning national debt, now surpassing $36 trillion. The decision follows a prolonged period of fiscal deterioration and reflects waning confidence in the government's ability to implement credible budget reforms.

Although Moody’s revised the U.S. outlook from “negative” to “stable,” the downgrade underscores the structural nature of America’s fiscal challenges, particularly the widening gap between revenue generation and expenditure control.

Political Gridlock Undermines Fiscal Reform

Moody’s justification centers on repeated failures by successive administrations and Congress to reach bipartisan agreements to contain budget deficits and rising interest obligations. Despite the Trump administration’s renewed promises to balance the federal budget, its signature tax cut extension proposals—touted as legacy-defining legislation—have stumbled in Congress. Resistance from hardline Republicans demanding more aggressive spending cuts has dealt a rare political setback to President Trump.

Moody’s projects the federal debt-to-GDP ratio to rise from 98% in 2024 to 134% by 2035 unless structural reforms are implemented. These projections imply a worsening fiscal trajectory, making it harder for the U.S. to maintain investor confidence in its long-term credit profile.

Market Reactions and Broader Financial Implications

The downgrade has already triggered turbulence in the financial markets. U.S. Treasury yields rose sharply after the announcement, and analysts warn that investor sentiment may weaken further as markets reopen. Long-term yields, in particular, could continue to climb unless offset by flight-to-safety behavior during broader economic uncertainty.

Jay Hatfield of Infrastructure Capital Advisors emphasized that the downgrade hits at a moment of market fragility, especially as investors digest a wave of recent Trump-imposed tariffs and rising concerns over inflation. Spencer Hakimian of Tolou Capital Management noted that lower credit ratings typically translate into higher borrowing costs—not just for the federal government, but for the broader economy, including businesses and consumers.

Skepticism and Political Fallout

The downgrade has reignited partisan tensions. Former Trump economic adviser Stephen Moore denounced the move as irrational, while White House communications director Steven Cheung publicly attacked Moody’s analyst Mark Zandi, calling his assessment politically motivated. Meanwhile, Democrats, including Senate Majority Leader Chuck Schumer, claimed the downgrade reflects the consequences of "reckless" tax-cut policies and the Republican party’s fiscal irresponsibility.

The U.S. Treasury Department has yet to issue a formal response, but Treasury Secretary Scott Bessent has previously emphasized efforts to reduce the cost of government borrowing. However, the lack of tangible progress in spending restraint or revenue enhancement continues to weigh on the government’s fiscal credibility.

Historical Context and Long-Term Outlook

This marks the third credit downgrade in U.S. history. Standard & Poor’s stripped the U.S. of its AAA rating in 2011 during a debt ceiling crisis, and Fitch followed suit in August 2023 amid recurring last-minute debt ceiling negotiations. Moody’s, the last of the three major agencies to maintain a top-tier rating for the U.S., now joins the others in issuing a warning about America's long-term fiscal health.

Analysts argue that unless Washington can engineer a reliable, bipartisan budget framework, the risk of future downgrades and market instability will persist. Brian Bethune of Boston University stressed the need for a “credible fiscal pact” that places deficits on a downward path. Without it, the cost of inaction will likely be reflected in diminished fiscal flexibility, rising debt service costs, and a weakening of the U.S. dollar’s safe-haven status.

Moody’s downgrade of U.S. creditworthiness is more than a symbolic move—it is a signal to global investors that America’s long-term fiscal discipline is in question. At a time when interest rates are high, trade tensions are escalating, and debt servicing costs are growing, the downgrade may further strain the government’s capacity to respond to economic shocks. Without a shift toward transparent and sustainable fiscal policy, the U.S. risks not only higher borrowing costs but also a loss of credibility in global capital markets.