China’s Premier Li Qiang highlighted the need to balance development and security while establishing measures to prevent risks for sustained growth. He emphasized that policy readiness and systemic stability are key. Li stressed the importance of pursuing high-quality development in both the economy and society. He called for meeting the needs of the people, focusing on domestic growth, and aligning strategies to boost domestic demand with reforms on the supply side. To tackle international uncertainties, he suggested fostering internal stability and enhancing long-term risk prevention. He also recommended creating response plans and maintaining policy reserves to steer clear of systemic risks.

Market Movements

In market news, the AUD/USD pair showed slight gains but stayed below 0.6600. Traders are anticipating a meeting between U.S. President Donald Trump and Chinese President Xi Jinping later this week. China’s leadership is prioritizing stability and risk prevention rather than aggressive growth. This indicates a desire to safeguard their economy from global uncertainties, leading to more predictable, government-led policies. As a result, we may see fewer drastic changes driven by Chinese policies, though this may limit the potential for major unforeseen stimulus. This careful approach is reflected in the latest economic data. China’s GDP growth for Q3 2025 was reported at 4.8%, just below the 5% target, and the most recent manufacturing PMI of 50.2 shows only modest expansion. These statistics suggest that Beijing is focusing on a smooth economic landing instead of a high-risk recovery.

Outlook and Strategy

For investors, this reinforces the idea that assets linked to Chinese growth, such as the Australian dollar, may experience limited gains. Iron ore prices have stabilized around $115 per tonne for several weeks, indicating steady but not booming demand. In this environment, making large, risky bets on a surging AUD seems less appealing. The upcoming U.S.-China presidential meeting is a key unknown factor. Past high-stakes meetings, especially during the 2018-2019 trade tensions, caused significant market disruptions over a single weekend. As a result, a spike in short-term volatility for currency pairs like AUD/USD and major indexes is likely. Given this, we should think about buying volatility before the meeting. Options strategies like straddles or strangles on China-related ETFs could benefit from sharp movements in either direction, allowing us to trade the event itself rather than predict the outcome. Looking beyond this week, if China maintains its focus on stability, we can expect volatility to decrease. This suggests a shift toward selling premium through strategies like iron condors on key indices. The main goal is to hedge against short-term political risks while aligning with the longer-term vision of a more stable, less volatile Chinese economy. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now