Economy/Resources

Cui Dongshu, Secretary-General of the China Passenger Car Association (CPCA), said that domestic demand for new-energy lithium batteries is likely to fall sharply at the beginning of 2026 compared with the fourth quarter of 2025. In response, battery manufacturers are expected to cut output and take extended production breaks to adjust to the seasonal and policy-driven downturn.

He cited several key factors behind the expected decline:

1. Policy impact on passenger vehicles: Adjustments to the vehicle purchase tax for new-energy passenger cars are expected to reduce sales by at least 30 percent quarter-on-quarter from the fourth quarter of 2025.
2. Post-subsidy slump in commercial vehicles: New-energy commercial vehicles are likely to see a steep quarter-on-quarter drop after year-end rushes to secure subsidies and tax exemptions.
3. Limited export spillover: While exports of new-energy passenger vehicles may remain relatively strong in early 2026, they are unlikely to significantly boost battery demand for independent battery suppliers.
4. Weak U.S. energy storage pull: Demand from the U.S. energy storage market offers little support for China’s battery exports. Battery shipments to the U.S. fell sharply in 2025, and AI-driven storage demand in the U.S. provides minimal upside for Chinese producers.
5. Pressure from low domestic storage prices: Domestic energy storage tender prices have dropped well below 300 yuan per kilowatt-hour, dampening incentives for price increases. At the same time, vehicle batteries cannot offset losses incurred in the energy storage sector.

Together, these factors point to a challenging start to 2026 for China’s new-energy battery industry.

Source: Stock Times, December 28, 2026
https://stcn.com/article/detail/3561185.html China Faces Sharp Early-2026 Slump in New Energy Battery Demand

Russian media report growing complaints about door-lock malfunctions in Chinese-made vehicles, particularly during extreme cold. Drivers say the driver-side door can freeze shut, in some cases forcing them to attempt escape through a window—an option that becomes risky in freezing conditions and may damage window-lift mechanisms.

According to Russian outlet Lenta Dnya, the issue is commonly caused by condensation seeping into the electric door-lock actuator. When temperatures drop, the moisture freezes, causing the lock to seize and preventing the door from being opened even manually. Videos circulating online show drivers unable to unlock or open doors from either inside or outside the vehicle, even after lowering the window.

Automotive expert Vadim Kabanov told The Post that harsh Russian winters could turn some Chinese vehicles into “mobile coffins,” posing serious safety hazards. He added that Chinese cars generally perform worse in winter conditions than Korean, Japanese, and German models, and claimed that owners often need to replace key components every three years, with frequent issues including transmission failures.

Source: Epoch Times, January 13, 2026
https://www.epochtimes.com/gb/26/1/12/n14674773.htm

In late December 2025, a group of economists and data analysts specializing in China’s structural macroeconomic risks concluded—based on a cross-sector quantitative indicator framework—that 2026 may become a critical window in which seven major crises could erupt simultaneously.

The warning signs span seven key indicator clusters:

• Worsening pension contribution and payout gaps;
• Collapsing local government fiscal self-sufficiency alongside shrinking land-sale revenues and mounting hidden-debt pressure;
• Synchronized reversals in new-home sales, second-hand listings, and inventory digestion in major cities;
• Rising stress in small and mid-sized banks reflected in non-performing loans, interbank funding strain, and delayed wealth-management redemptions;
• Prolonged contraction in industrial profits, output growth, and employment indicators;
• Accelerating demographic decline marked by falling births, a shrinking working-age population, and slowing preschool enrollment; and
• A broad downturn in external demand signaled by weakening export orders, slowing shipments to major markets, reduced coastal electricity consumption, and declining container throughput.

Historically, these seven core indicator groups have rarely deteriorated together within a 12–18 month period. By the second half of 2025, however, most had already breached critical warning thresholds and were worsening in tandem—raising the risk of an unusually dangerous system-wide “resonance of disappointment” across China’s fiscal, financial, demographic, and economic foundations.

Source: 51 News, December 30, 2025
https://info.51.ca/articles/1500070?wyacs=info-article-list

China’s central bank announced that a new framework for the digital yuan (e-CNY) will take effect on January 1, 2026, marking a major transition from a digital cash model to a deposit-based digital currency. Chinese state-run media outlet Xinhua reported that the move represents a significant upgrade of the e-CNY from “version 1.0” to “version 2.0.” Key points from the Xinhua report are translated below.

Under the new system, digital yuan balances held in commercial bank wallets will be treated as account-based bank liabilities, similar to traditional deposits rather than cash. Banks will be required to pay interest on verified digital yuan wallet balances in accordance with deposit interest rate guidelines, manage these balances within their asset-liability frameworks, and provide deposit insurance protection equivalent to that of conventional bank deposits. Non-bank payment institutions participating in the system will be required to maintain 100 percent reserve backing for their digital yuan holdings.

The updated framework also brings digital yuan balances into China’s reserve requirement system, clarifying the rights and responsibilities of operating institutions and strengthening regulatory oversight.

As of the end of November 2025, the digital yuan had processed 3.48 billion transactions with a total value of 16.7 trillion yuan. A total of 230 million personal wallets and 18.84 million institutional wallets had been opened. In cross-border applications, the multilateral central bank digital currency bridge handled 4,047 transactions worth approximately 387.2 billion yuan, with the digital yuan accounting for more than 95 percent of total transaction value.

Source: Xinhua, December 29, 2025
https://www.xinhuanet.com/fortune/20251229/b4769a74c4874897935a9bbd7ee2359f/c.html

China’s foreign exchange reserves reached US$3.3579 trillion at the end of December 2025, an increase of US$11.5 billion, or 0.34 percent, from November, according to data released by the State Administration of Foreign Exchange. Over the same period, China’s gold reserves rose by 30,000 ounces to 74.15 million ounces, marking the central bank’s 14th consecutive month of gold purchases.

Analysts quoted by Chinese state-run media outlet People’s Daily wrote that “the current level of foreign exchange reserves remains adequately ample and is expected to stay broadly stable.”

The analysis noted that China’s gold holdings remain relatively low. As of the end of November 2025, gold accounted for about 9.5 percent of China’s official international reserves—mainly composed of foreign exchange and gold—well below the global average of around 15 percent. From the perspective of optimizing the reserve structure, continued increases in gold holdings are seen as necessary. Gold is also widely accepted worldwide as a final means of payment, and “further purchases by the central bank could help strengthen confidence in China’s sovereign currency and support the advancement of renminbi internationalization.”

Source: People’s Daily, January 8, 2026
http://finance.people.com.cn/n1/2026/0108/c1004-40641245.html