10 December 2024 – The German steel summit at the Federal Chancellery shows the subsidy dreams of an outgoing chancellor who seems to be in election campaign mode for his core clientele and can no longer muster a political majority. China wants to strengthen its property market with a moderately loose monetary policy. And Japan’s economic growth is exceeding expectations.
China wants to strengthen its property market in 2025
The Politburo of the Chinese Communist Party has announced that it will implement a ‘moderately loose’ monetary policy in 2025. This decision marks a change of course towards more fiscal stimulus, particularly to support the property market. This could boost China’s economy and combat deflation risks.
The property sector, a key driver of growth, is benefiting from the measures designed to encourage investment. In response, yields on long-term government bonds rose, the renminbi strengthened and the Hang Seng Index climbed by three per cent. These developments could have a positive impact on the property market and the Chinese economy.
Japan’s economic growth exceeds expectations
Japan’s economy exceeded expectations in the third quarter with growth of 0.3 per cent. Private consumption increased by 0.7 per cent after 0.6 per cent in the previous quarter, boosted by stabilising real wages in November. Companies are also benefiting, as around 60 per cent of their sales are generated in the domestic market.
The TOPIX index rose by 15 per cent this year in euro terms and is trading at a historic level with a price/earnings ratio of 14. Earnings are expected to rise by a good nine per cent next year. Japanese equities therefore continue to offer attractive prospects, underpinned by the latest growth figures.
German steel summit just an election campaign stage for outgoing chancellor
The German SPD and its incumbent Chancellor Olaf Scholz now seem to be in election campaign mode for good. In any case, there is no end to the Chancellor’s summit inflation, as Monday’s steel summit in the Chancellery shows. Once again, it was all about one-sided aid for steel manufacturers, which has always been a guarantee for votes for the SPD.
Further subsidies totalling billions without a financing plan
According to Olaf Scholz, the already more than generous steel subsidies of more than 1.4 billion euros per year are to be extended even further. Another 1.3 billion euros in federal subsidies are now to be added in 2025 to compensate for an increase in grid fees. Scholz is going even further and wants to halve the costs for steel manufacturers in the future. According to media reports, he left open how this is to be financed.
This was also the demand from Berlin to the EU Commission in Brussels that the relief instruments for the steel industry must remain in place. Their design should be generous and even extended.
Chancellor ignores small and medium-sized companies
It is unlikely that Scholz will find a majority in Germany in favour of his ludicrous subsidy plans. However, his proposals and demands show where the Federal Chancellor’s interests lie and where they do not: his interests do not lie with small and medium-sized enterprises and their millions of employees! Instead of strengthening the competitiveness of SMEs, which form the economic backbone of Germany and the European Union, in the medium to long term and boosting demand in his own economy, he is pursuing purely ideologically motivated election and patronage politics, thereby wasting taxpayers’ money.
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