China Outlook Brightens on US Talks, Housing Slump Persists

US-China trade developments eased fears over Beijing or Washington breaching the October 30 trade truce on Monday, November 24. A US-China call between President Trump and Chinese President Xi signaled improving trade ties, lifting sentiment.

Monday’s trade headlines came at a critical juncture for Beijing. Beijing continues to grapple with a collapsed housing market and weak consumer sentiment, weighing on domestic consumption. Easing trade tensions and rising demand for Chinese goods could further ease margin squeezes, potentially boosting jobs, consumer confidence, and domestic demand.

Recent Chinese economic indicators have raised concerns about Beijing achieving its 5% GDP growth target. Improved US-China relations could change the narrative.

US-China Call Spotlights Improving Relations

US President Trump had a call with Chinese President Xi Jinping on Monday, November 24, a follow-up to the meeting on October 30 in South Korea.

President Trump shared details of the call on X, formerly Twitter, stating:

“I just had a very good telephone call with President Xi, of China. We discussed many topics, including Ukraine/Russia, Fentanyl, Soybeans, and other Farm Products, etc. […]. Our relationship with China is extremely strong! This call was a follow-up to our highly successful meeting in South Korea three weeks ago. Since then, there has been significant progress on both sides in keeping our agreements current and accurate. Now we can set our sights on the big picture.”

Trump also stated that he accepted an invitation to visit Beijing in April. President Xi agreed to meet in the US later in the year.

However, there were no comments regarding the 47% US tariff on Chinese shipments and chip supplies to China.

The absence of a fair trade truce, which involves China loosening its purse strings and easing restrictions on rare earths while still facing US restrictions, raises doubts about the sustainability of any verbal agreements.

Magnet sales to the US reportedly reached a nine-month high of 656 tons in October after slumping below 50 tons in May, setting the stage for positive talks.

The Kobeissi Letter reported on President Xi’s comments about the call, stating:

“China’s President Xi says US-China trade relations maintained positive momentum after his call with President Trump this morning. Xi also adds that the US and China should expand their list of cooperation. This comes just minutes after news emerged that Trump is considering allowing Nvidia to sell advanced AI chips to China.”

Nvidia Chip Sales to China: Will Trump Give the Green Light?

According to CN Wire, US Secretary of Commerce Howard Lutnick told reporters that the decision on Nvidia (NVDA) chip sales to China was on Trump’s desk.

Easing restrictions on US chip sales to China and Beijing’s restrictions on rare earth exports to the US could be a stepping stone toward lower tariffs. However, Monday’s lack of reference to tariff reductions suggests any adjustments may still be some way off.

Keeping to the terms of the one-year trade truce could decide the fate of tariffs in April. It could be a tense discussion if 47% US tariffs remain in effect and there are no talks about reducing levies.

China Housing Crisis and Domestic Demand Remains a Beijing Headache

While the President Trump-Xi call may offer some market relief, China’s domestic woes remain a challenge for Beijing. The housing market has yet to show signs of recovery, which may continue weighing on consumer sentiment and domestic consumption.

Reports broke on Thursday, November 20, of Beijing considering fresh stimulus to bolster the real estate sector. According to the CN Wire:

“Policymakers, including the housing ministry, are considering nationwide mortgage subsidies for first-time buyers, higher income tax rebates for mortgage borrowers, and lower home transaction costs. The proposals have been under review since at least the third quarter as sales and prices continued to fall.”

The Kobeissi Letter commented on a continued slump in fixed-asset investment and the housing market, stating:

“Fixed-asset investment in China fell 1.7% YoY during the first 10 months of 2025, the worst decline on record. In October alone, investment dropped 12.0%, marking the 5th consecutive monthly decline. Property investment remained the biggest drag, falling 14.7% YoY in the first 10 months of the year.”

Stabilizing the housing market could be a crucial step toward rising domestic consumption. Consumer spending has slowed sharply in 2025, underscoring the continued impact of housing market woes on sentiment and household wealth. Retail sales rose 2.9% YoY in October, down from 3.0% in September and slowing sharply from 6.4% in May.

Economists Signal Further House Price Weakness

UBS China property-market optimist John Lam recently turned pessimistic about the housing market outlook. Reportedly abandoning an optimistic outlook for the sector, Lam predicted that prices will continue falling for at least two more years as buyer demand weakens.

He also noted that home buyers over the past decade are likely to be loss-making, underscoring the effects of the housing market slump on wealth and consumption.

Mortgage subsidies may be a step in the right direction. But demand would likely hinge on a stabilization in house prices. A continued fall in prices may limit the effectiveness of mortgage subsidies on demand.

Mainland and Hong Kong Equity Markets Advance on Trade Headlines

Mainland China’s equity markets opened higher on Tuesday, November 25, potentially snapping a three-day losing streak. The CSI 300 rose 0.48% to 4,469 in early trading, reducing November’s loss to 3.65%. Meanwhile, the Hang Seng Index climbed 0.84% in morning trading, taking the index into positive territory for November (+0.11%).

Easing US-China trade tensions could lift risk appetite. However, further stimulus measures from Beijing may be crucial, given the weak external and domestic demand backdrop. The CSI 300 could target its current year high of 4,762 if Beijing delivers and demand improves.

 

Outlook: China Data and Beijing in Focus

While US-China trade developments will continue to influence sentiment, key Chinese economic indicators also require consideration.

Chinese industrial profit and NBS private sector PMI data will face heightened scrutiny this week. Rising profits and a pickup in private sector activity could raise hopes for Beijing achieving its GDP growth target, sending Mainland-listed stocks higher.

Upbeat data could ease concerns about Beijing holding back stimulus targeting domestic consumption and the lasting effects of US tariffs on external demand.

Discover strategies to navigate this week’s market trends here.