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    China is expected to achieve its 5% growth target despite ongoing domestic economic weakness.

    by VT Markets
    /
    Jan 19, 2026
    **China Relies On Exports For Growth** China’s weak domestic spending is a major indicator for market trends. The Caixin Services PMI for December 2025 dropped to 49.8, signaling contraction. This advises us to consider buying put options on ETFs that target Chinese consumer discretionary stocks and retailers. On the other hand, China’s dependence on exports for growth makes its manufacturing sector stand out. A 6.6% year-over-year increase in exports for December 2025 shows continued strength in these companies. Thus, investing in call options on indices heavily involved in industrial exports, like the ChiNext, appears to be a smart choice. **Outlook For Currency And Commodities** This economic situation indicates that the yuan will likely stay within a narrow range against the US dollar. To support the export sector, which is crucial for growth, any rise in the yuan’s value will be carefully managed and kept minimal. The People’s Bank of China has maintained the one-year MLF rate steady for six months, showing its preference for stability. For currency traders, this suggests low volatility in the USD/CNY pair in the coming weeks. A useful strategy could be to sell straddles or strangles on USD/CNY, aiming to capitalize on premium decay as the pair stays range-bound. The likelihood of a sudden and sharp rise in the yuan’s value seems very low. Lastly, the decline in domestic investment impacts commodities. The 3.8% drop in fixed asset investment for 2025 continues a troubling trend from the early 2020s property crisis. This ongoing weakness in construction points to a bearish outlook for industrial metals. Therefore, taking short positions or buying puts on copper and iron ore futures is a sensible hedge. Create your live VT Markets account and start trading now.

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