International News 17 December 2025
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China’s New Home Prices Extend Decline as Property Recovery Remains Elusive
China’s new home prices fell again in November 2025, highlighting the persistent weakness in the property sector despite repeated government pledges to stabilize the housing market. Official data from the National Bureau of Statistics (NBS) showed new home prices declined 0.4% month-on-month, a slightly milder drop than October’s 0.5% fall. On a year-on-year basis, however, pressure intensified, with prices down 2.4%, deeper than the 2.2% decline recorded a month earlier. The downturn, ongoing since mid-2021, has been driven by weak sales, liquidity stress among developers, and falling home values that have eroded household wealth and weighed on consumption. The secondary housing market remains particularly weak, with prices falling across all city tiers. Year-on-year, prices dropped 5.8% in tier-one cities, 5.6% in tier-two, and 5.8% in tier-three cities. Separate data showed property investment and home sales slumped further over the first 11 months of the year, underscoring sustained stress in the sector. Economists surveyed by Reuters expect home prices to keep falling through 2026 before stagnating in 2027, citing structural challenges and oversupply. The IMF has urged Beijing to step up efforts to resolve the crisis, estimating China may need to deploy around 5% of GDP over three years. While authorities have so far avoided large-scale stimulus in late 2025, they reiterated commitments to contain systemic risks through city-specific measures, including cutting unsold inventory and expanding affordable housing programs.
Japan’s Manufacturing Stays in Contraction as Services Momentum Softens
Japan’s manufacturing sector remained in contraction in December 2025, though at a slower pace, while the services sector showed signs of losing momentum, adding pressure to the economy toward year-end. A flash S&P Global Manufacturing PMI rose to 49.7 from 48.7 in November, marking the sixth straight month below the 50 threshold that separates expansion from contraction. Factory output weakened slightly, but the decline in goods demand eased to its slowest pace in about 18 months, suggesting early signs of stabilization. Business confidence heading into 2026 remains relatively strong but has softened, particularly in manufacturing, amid global economic uncertainty, an aging population, and rising production costs. The services PMI edged down to 52.5 from 53.2, pulling the composite PMI to 51.5 from 52.0, indicating slower overall growth. Despite this, employment growth accelerated to its fastest pace since May 2024, and backlogs of work rose at the quickest rate in two and a half years, pointing to resilient underlying demand. However, inflationary pressures intensified, with price increases in both goods and services reaching their fastest pace in eight months. Meanwhile, a Bank of Japan survey showed large manufacturers’ sentiment at a four-year high, though firms expect conditions to worsen in the coming quarter due to concerns over potential U.S. tariff hikes and weakening domestic consumption.
Oil Prices Slide as Oversupply Fears and Geopolitics Weigh on Market
Oil prices fell at the start of the week as investors balanced supply disruptions linked to rising US–Venezuela tensions against concerns over global oversupply and the potential impact of a Russia–Ukraine peace deal. On Monday, Brent crude for February 2026 delivery settled down 0.92% at US$60.56 per barrel, while WTI crude for January delivery fell 1.08% to US$56.82 per barrel. Both benchmarks had already dropped more than 4% last week, pressured by expectations of a global oil surplus in 2026. Venezuelan oil exports have declined sharply after the US seized a tanker and imposed new sanctions on shipping firms linked to Venezuela, while reports of planned further US interceptions and a cyberattack on state oil company PDVSA added to near-term supply concerns. Despite these disruptions, the downside impact on prices was limited by ample global supply, weaker demand, and large volumes of Venezuelan crude already en route to China, its biggest buyer. Market sentiment was also dampened by progress in Ukraine–US peace talks, which raised expectations that a potential settlement could eventually bring more Russian oil back to global markets. Additional pressure came from weak Chinese economic data, with factory output slowing to a 15-month low in November and retail sales growing at their weakest pace since December 2022. Analysts warned that downside risks persist, as major banks such as J.P. Morgan expect the oil surplus to widen further into 2026–2027, with supply growth projected to significantly outpace demand.