SwedCham China Insights for week of 9 December - 13 December

Weekly China Insight

Beijing, 13 December 2024

China signals more policy support with promise of aggressive stimulus in 2025

President Xi Jinping on Thursday chaired the annual Central Economic Work Conference (CEWC) to set China’s economic agenda for the year ahead, repeating a Politburo decision to follow a “more active” fiscal policy and “moderately accommodative” monetary policy.

This Monday, Xi chaired a monthly meeting where the Politburo promised to enhance domestic demand, stabilize property and stock markets, and deploy "extraordinary" counter-cyclical tools. In the Politburo meeting readout and during Xi’s meeting with heads of international organizations later in the week, the Chinese leadership repeated its resolve to achieve the 5% GDP annual growth target this year.

The leadership’s desire for more aggressive stimulus in 2025 signals a growing urgency to address China's sluggish domestic consumption and external trade pressures, which may soon escalate as Trump begins his second term. By reviving the term “moderately accommodative monetary policy” – last used in the aftermath of the 2008 global financial crisis – Beijing is demonstrating its readiness to expand fiscal spending and accelerate interest rate cuts at a scale unseen since 2012.

China starts antitrust investigation into Nvidia
On 9 December, China’s State Administration for Market Regulation (SAMR) opened an antitrust probe into U.S. chipmaker Nvidia, citing potential violations related to its 2020 acquisition of Israeli chip designer Mellanox Technologies and its dominant position in the AI chip market, where it controls over 90% global market share. Simultaneously, Nvidia faces rising antitrust scrutiny globally, with the EU investigating alleged bundling practices tied to its graphics processing units (GPUs) and its proposed acquisition of Run:ai.

The U.S., UK, and South Korea have also increased regulatory pressure on Nvidia’s market dominance, citing concerns about anti-competitive behavior in the AI and accelerated-computing sectors.

China’s probe comes just a week after the U.S. imposed fresh export restrictions on semiconductor tools and added 136 Chinese firms to its Entity List (see last week’s update). At the time, China responded by banning exports of key critical minerals like gallium and antimony to the U.S.

CATL partners with Stellantis to build €4.1 billion battery plant in Spain

On 10 December, Chinese battery giant CATL and European automaker Stellantis announced a €4.1 billion (approximately RMB 30.8 billion) joint venture to build a lithium iron phosphate (LFP) battery plant in Zaragoza, Spain. Designed to support Stellantis’s affordable EV offerings, the facility will have an annual production capacity of 50 GWh. CATL and Stellantis will each hold a 50% stake, with CATL appointing the chairman and the CEO. The plant is expected to begin production by late 2026, pending regulatory approvals from China, Spain, and the EU. This facility marks CATL’s third battery plant in Europe, after its recent investments in Germany and Hungary.

The CATL-Stellantis partnership reflects CATL's strategic expansion into Europe.

China’s vehicle trade-in subsidy boosts domestic auto demand

China's old-for-new vehicle trade-in subsidy program – rolled out earlier this year to boost domestic consumption – finally showed some success, with over 5 million subsidy applications recorded as of 9 December. Supported by RMB 150 billion in special long-term bonds, the pro-consumption program is starting to spur a recovery in domestic auto sales. Retail sales of passenger cars in November grew 16.5% y/y, reaching 2.42 million units. Among them, domestic new-energy vehicle (NEV) sales increased by 50.5% y/y, accounting for 52.3% of total passenger car sales for November.

Industry experts are calling on the government to extend the vehicle trade-in subsidy program into 2025, citing its critical role in stabilizing domestic demand.

WeChat mini programs reach 949 million users, driving diversified digital engagement
As of October 2024, WeChat mini programs had 949 million users – a 3% y/y growth – according to QuestMobile's latest annual report. User engagement with WeChat mini programs has surged, with average monthly usage rising to 1.7 hours and nearly 70 sessions per user, up 15.1% y/y and 5.2% y/y, respectively. WeChat mini programs have expanded their presence across lifestyle, retail, and entertainment sectors, with categories like mobile video and healthcare experiencing exceptional growth rates of 40.6% y/y and 34.3% y/y. The platform has also emerged as a critical channel for brand marketing, with luxury brands like Cartier and Hermès achieving explosive growth in active users, increasing by 2,551% y/y and 704% y/y respectively.

The widespread adoption of mini programs on China’s super APPs, including WeChat, Alipay and Baidu, exemplify how simplified digital ecosystems can drive business and consumer engagement. It also strengthens the dominance of tech giants' platform ecosystems, potentially leading businesses overly reliant on these centralized platforms. Additionally, the rise of mini programs is putting significant pressure on dominant operating systems like iOS and Android, as their app stores face direct competition. This shift could ultimately lead to a decline in revenue streams for these operation systems.