Booming exports are pushing up China's currency and while analysts think authorities will resist further gains, risks are to the upside and could test the country's fragile economy.

As the yuan exchange rate tiptoed toward and then passed the strong side of 7-per-dollar last year, foreign currency flows into Chinese banks hit a record $452 billion in December.

The amount converted to yuan also hit a record of $311 billion, figures from the State Administration of Foreign Exchange showed, with the flow sending the exchange rate to its strongest point since 2023 at 6.9378 per dollar yesterday (3 February).

Bank analysts think that is more or less enough and say a toolkit of semi-official yuan selling, restraining the trading band, persuasive arguments from authorities and tweaks to reserve ratios for the banking system can be rolled out to keep it from gaining further.

An average of 13 forecasts from global investment banks has the currency at 6.92 to the dollar by year's end, while market pricing points to around 6.8 in the derivatives market.

That sort of level is likely to frustrate the country's trading partners, where manufacturers are under pressure from Chinese rivals, and add more fuel to a boom in offshore yuan borrowing.

But out-of-consensus calls point to it rising further if exporters ramp up their yuan conversions, with Goldman Sachs this week raising its 12-month yuan forecast to 6.7 per dollar, about 3.5% firmer than Tuesday's trading level.

"The pace of appreciation has exceeded our expectations and that is even before the sharp move lower in the broad dollar," said Goldman analysts, who based their outlook on record flows and what they viewed as a shift in tone from the central bank.

The People's Bank of China manages the yuan by keeping it inside a band that is 2% on either side of a midpoint that it announces each trading day. It declined to comment on its stance on the currency or on analyst forecasts when contacted by Reuters.

Last month, central bank Deputy Governor Zou Lan said the yuan is expected to experience two-way fluctuations while maintaining flexibility.

Base Case

A stronger yuan erodes a competitive advantage for exporters, so analysts believe a runaway rally is unlikely. They point to state bank selling and signals from the PBOC's midpoint settings as evidence authorities will weigh in against gains.

"Given that China's economic growth is still highly dependent on exports, the People's Bank of China may not yet be willing to risk a more significant appreciation of the currency," said Wei He, an economist at Gavekal Dragonomics.

The PBOC midpoint has been weaker than market estimates since November and – traders say – state banks have been dollar buyers whenever the yuan has started to rise too sharply.

Analysts also expect authorities to adjust foreign exchange reserve requirements, since they could force banks to buy and hold more dollars and offset yuan buying.

"We see a high chance for the 20% risk reserve on banks' forward FX sale to be removed and expect FX reserve requirement ratio to be raised," said Janice Xue, a strategist at Bank of America Global Research.

China's 5% gross domestic product growth last year rested upon an export surge that delivered a record trade surplus of $1.2 trillion, up around 20% from a year earlier.

"Our base scenario remains a strong export performance, which could support the yuan," said Chaoping Zhu, global market strategist at J.P. Morgan Asset Management. "However, as foreign governments become more cautious (about) the impacts on their economies, uncertainties are rising for Chinese export growth."

"This might suggest a higher two-way volatility in the exchange rate," he said, which he thinks is likely to fluctuate in a range around 7-per-dollar. On a trade-weighted basis, the yuan is at the lower end of a range that it has kept since the pandemic, which provides support for exporters.

Upside Risks

Stability has also been the defining feature of the nine-month rally that has lifted the yuan nearly 6% against the dollar, which traders say is aimed at boosting the currency's appeal for investment, lending and reliability for settling trade.

That also holds momentum in check against the risk that a rising currency drives a positive feedback loop where buying from exporters sends it higher, encouraging more buying.

Ding, a Shanghai-based electrical industry exporter who only provided his surname, said his firm was already converting more dollars to yuan more quickly because of recent exchange rate moves.

To be sure, at 68.8%, the proportion of export receipts converted to yuan in December was on the rise, but it was not a record, and analysts believe authorities can manage even bigger flows.

"We expect the level of surplus to go beyond $1 trillion again in 2026," said Kelvin Lam, senior China+ economist at Pantheon Macroeconomics, who expects the exchange rate to be at 6.85 at the end of the year.

"Repatriation of the USD piled outside of China because of trading activity will continue to be a driving force to push (the yuan) to the stronger end, but the PBOC will make sure the appreciation (is) on a gradual, measured pace."

At the Singapore Airshow, exhibition halls are filled with aircraft models, simulated cockpits and interactive displays showcasing the latest advances in commercial aviation. Among them, one stand has drawn particular interest: Comac, China's state-owned aircraft manufacturer.

Comac has made notable progress since its C919 passenger jet flew to Singapore two years ago, marking its first journey outside China. Designed to rival Airbus's A320neo and Boeing's 737 MAX, the aircraft is increasingly being promoted to markets beyond China, reports the BBC.

For Comac, the Singapore Airshow offers an opportunity to present itself as a future challenger to the long-dominant Airbus-Boeing duopoly in the Asia-Pacific region - the world's fastest-growing aviation market - at a time when airlines are struggling with aircraft shortages, delivery delays and supply chain disruptions.

"I think over time Comac will become a global competitor, but it will take years," Willie Walsh, director general of the International Air Transport Association (IATA), told the BBC.

"In 10 or 15 years, we'll likely be talking about Boeing, Airbus and Comac together."

Industry analysts say the region urgently needs another aircraft manufacturer. Airlines across Asia-Pacific have been affected by delays at both Boeing and Airbus, compounded by engine shortages and broader supply chain constraints. Trade tensions and tariff uncertainties have added further pressure to manufacturers and airlines alike.

According to IATA data, airlines worldwide are waiting longer than ever for new aircraft, pushing up the average age of fleets and increasing costs, as older planes burn more fuel. Walsh said Asia-Pacific airlines could achieve double-digit growth in 2026 if enough aircraft were available. "The waiting time between ordering a plane and receiving it is now around seven years, which is incredibly frustrating," he said.

This situation has helped position Comac as an alternative option. More than 150 Comac aircraft are currently in service within China, while its planes are also flying in Laos, Indonesia and Vietnam. Brunei's GallopAir has placed a significant order, and Cambodia has indicated plans to acquire around 20 aircraft.

"We need more suppliers," said Subhas Menon, director general of the Association of Asia Pacific Airlines (AAPA). "This industry operates as an oligopoly, and at times almost a duopoly. Comac's entry is long overdue and very welcome."

Strong backing from the Chinese government and comparatively lower prices could make Comac aircraft attractive, particularly to low-cost carriers in developing markets.

Mike Szucs, chief executive of Philippines-based budget airline Cebu Pacific, told the BBC that while Comac is not yet an immediate option, it could become one in the next decade. "Once certification hurdles are cleared in the 2030s, it could be a compelling choice for us and other airlines," he said.

Beyond Asia-Pacific, Comac is also pursuing European certification, with regulators already conducting test flights of the C919. Approval would allow the company to sell aircraft to European airlines, though officials say certification could take until 2028 or even the early 2030s.

Significant challenges remain, including integrating Chinese and Western components, developing global maintenance and repair networks, and establishing pilot training systems—areas where Airbus and Boeing benefit from decades of experience.

Comac also faces competition in the region from Brazil's Embraer, which has secured orders from carriers such as Scoot, Virgin Australia and Japan's ANA.

Meanwhile, Airbus and Boeing continue to dominate the region and maintain a strong presence at the Singapore Airshow. Both manufacturers have signalled that delivery delays, which have plagued airlines in recent years, may soon begin to ease.

Despite Comac's claim of more than 1,000 orders for the C919 from Chinese airlines, only around a dozen aircraft have been delivered so far. Verifying these figures is difficult, as Comac is state-owned and not publicly listed.

Unless Comac can overcome certification, infrastructure and delivery challenges, analysts say Airbus and Boeing are likely to retain control of Asia-Pacific skies for the foreseeable future, the BBC reports.

The United States will host more than 50 countries on Wednesday (4 February) for talks aimed at boosting their access to critical minerals, in a bid to loosen China's grip over vital industrial inputs that has allowed it to control global supply chains.

The gathering comes after President Donald Trump on Monday launched a strategic stockpile of critical minerals, called Project Vault, backed by $10 billion in seed funding from the US Export-Import Bank and $2 billion in private funding.

China has wielded its chokehold on the processing of many minerals as geo-economic leverage, at times curbing exports and suppressing prices and undercutting other countries' ability to diversify sources of the materials used to make semiconductors, electric vehicles and advanced weapons.

South Korea, India, Thailand, Japan, Germany, Australia, and the Democratic Republic of Congo are among countries attending the Washington meeting, though the US has not released a full list.

Beijing's expanded export controls on rare earths last year caused production delays and shutdowns for auto manufacturers in Europe and the US, and a China-generated glut of lithium has stalled plans to expand production in the US.

Such dependencies have unnerved Washington and its partners, which nonetheless have struggled for years to implement policies to stand up durable domestic mining and processing alternatives for lithium, nickel, rare earths and other critical minerals.

China's leverage was on full display in October when Trump agreed to trim tariffs on the country in exchange for Beijing's pledge to hold off on stricter restrictions on rare earths exports.

The talks underscore a broader US push to work with partners to counter China's dominance over critical minerals by coordinating policy tools at a time when Trump has angered allies with his sweeping "America First" tariff policies.

Washington and its partners are weighing measures that include aligning trade and investment incentives, encouraging new mining and processing capacity outside China, and exploring market interventions such as price floors, strategic stockpiles and export restrictions to reduce Beijing's leverage over supply chains vital to advanced manufacturing and national security.

"I think this is a recognition by the United States that it must act in concert with others to reduce its vulnerability in areas where China has supply dominance," said Scott Kennedy, who leads the Chinese business and economics program at the Center for Strategic and International Studies in Washington.

Incentives

US Secretary of the Interior Doug Burgum said on Tuesday that 11 more countries would be named to a critical minerals trade club this week, joining the US, Australia, Japan, South Korea, Saudi Arabia and Thailand. He said 20 more countries showed "strong interest" in joining the coalition.

US Secretary of State Marco Rubio and Vice President JD Vance will deliver remarks at the meeting of ministers from across Europe, Asia, Africa and Latin America, which according to the State Department, aims to "advance collective efforts to strengthen and diversify critical minerals supply chains."

"China has long played an important and constructive role in keeping the global industrial and supply chains of critical minerals safe and stable and is willing to continue to make active efforts in this regard," China's embassy in Washington told Reuters when asked about the meeting.

Industry experts say countries must find the right balance of incentives to boost investment in critical minerals production.

Those could include deploying newly created Section 232 tariffs in coordination with allies to establish industry-wide price floors for specific materials.

The Trump administration last year struck a price-floor agreement with rare earths producer MP Materials, but Reuters has reported the administration may now be moving away from company-specific deals in favour of a broader, international approach.

Washington's Group of Seven partners and the European Union have considered price floors to promote rare earth production, as well as taxes on some Chinese exports to incentivize investment.

Australia, which has been positioning itself as a critical minerals alternative to China, has also said it would establish a strategic reserve of minerals, expected to be ready by the second half of 2026.

Canberra is also considering setting a price floor to support local critical minerals projects.

"The reality is that none of us have tested these tools in this context. So, we're looking to see which will be most effective. Most likely it will be a bit of a menu of tools ... I don't think there's going to be a one silver bullet," one meeting participant told Reuters on condition of anonymity.

Gold prices bounced back to hover near $5,100 on Wednesday, underpinned by safe-haven demand as renewed US-Iran geopolitical tensions added to bullion’s appeal a day after it posted its best day in more than 17 years.

Spot gold was up 2.9 percent at $5,082.94 per ounce, as of 0813 GMT, after surging nearly 6 percent on Tuesday, its biggest daily gain since November 2008. Bullion scaled a record high of $5,594.82 last Thursday.

US gold futures for April delivery climbed 3.4 percent to $5,103.50 per ounce.

The US military on Tuesday shot down an Iranian drone that “aggressively” approached the Abraham Lincoln aircraft carrier in the Arabian Sea, the US military said.

Gold is bouncing back from a low of $4,403.24 touched on Monday after its biggest two-day sell-off in decades.

“After such a sharp rally, a correction was expected, it was not surprising and with gold coming back up, the fundamentals have not changed much,” ANZ analyst Soni Kumari said, adding that the geopolitical and economic backdrop remained mostly unchanged.

Goldman Sachs said on Wednesday that it saw significant upside risk to its $5,400 year-end forecast for gold on central banks maintaining their recent pace of accumulation alongside private investors stepping up gold ETF purchases.

“Going ahead ... we are expecting the same $5,600 levels (for gold) by the end of the first half or April-end while prices will continue to rise thereafter and our year-end target is $6,000/oz,” said Jigar Trivedi, a senior research analyst at IndusInd Securities.

Spot silver rose 6.1 percent to $90.34 an ounce. It touched a record high of $121.64 on Thursday but fell to a month-low at $71.33 on Monday having registered a record single-session price wipe-out of 27 percent on Friday.

Markets now await ADP private payroll data for more cues on the Federal Reserve’s policy path even as a partial US government shutdown has delayed the closely watched employment report for January.

Oil prices extended gains on Wednesday after the US shot down an Iranian drone and armed Iranian boats approached a US-flagged vessel in the Strait of Hormuz, rekindling fears of an escalation in tensions between Washington and Tehran.

Brent crude futures were up 15 cents, or 0.2 percent, at $67.48 per barrel at 0730 GMT. US West Texas Intermediate crude was up 28 cents, or 0.4 percent, at $63.49 per barrel.

Both benchmarks rose nearly 2 percent on Tuesday as the military incidents increased fears that a conflict could disrupt oil flows through the Strait of Hormuz or output from Iran.

“Uncertainty about how these talks will play out means the market will likely continue to price in some risk premium,” said ING commodity strategists on Wednesday.

The US military on Tuesday shot down an Iranian drone that “aggressively” approached the Abraham Lincoln aircraft carrier in the Arabian Sea, the US military said, in an incident first reported by Reuters.

Separately, in the Strait of Hormuz between the Persian Gulf and the Gulf of Oman, a group of Iranian gunboats approached a US-flagged tanker north of Oman, maritime sources and a security consultancy said on Tuesday.

OPEC members Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq export most of their crude via the Strait of Hormuz, mainly to Asia. Iran was the third-biggest OPEC crude producer in 2025, according to US Energy Information Administration data.

Meanwhile, Tehran is demanding that talks with the US this week be held in Oman not Turkey, and that the scope be narrowed to two-way negotiations on nuclear issues only, casting doubt on whether the meeting will proceed as planned.

“Heightened tensions in the Middle East provided support to the oil market,” said Satoru Yoshida, a commodity analyst with Rakuten Securities.

Oil prices also found support from industry data showing a sharp drop in US crude stockpiles. Inventories in the top producing and consuming nation fell over 11 million barrels last week, sources said, citing American Petroleum Institute figures.

Official data from the US Energy Information Administration is due on Wednesday at 10:30 a.m. EST (1530 GMT). Analysts polled by Reuters were expecting a rise in crude inventories.

On Tuesday, oil prices were also buoyed by a trade agreement between the US and India that raised hopes of stronger global energy demand, while continued Russian attacks on Ukraine added to concerns that Moscow’s oil would remain sanctioned for longer.

“India’s trade agreement with the US to halt purchases of Russian crude, along with the ongoing Russia-Ukraine war, is also providing support,” Yoshida said, projecting that WTI would likely continue to trade around $65 a barrel for now.

Stock markets mostly struggled on Tuesday while gold and silver prices rebounded in fresh volatile trading.

Oil prices rose while Wall Street indices retreated, shrugging off passage of legislation to end a four-day partial US government shutdown.

The price of gold climbed more than seven percent but later traded near $4,950 per ounce. Last week it reached a record-high close to $5,600 before tumbling.

Gold is "heading for its biggest daily gain since 2008, as prices rebounded sharply following the steepest two-day decline in decades," said analyst Axel Rudolph at trading platform IG.

Silver surged more than 15 percent to $86 on Tuesday, still well short of the record near $120 it hit last week.

"A sense of calm descended after the precious metal auctions, opening the door for investors to buy on the dip," noted Richard Hunter, head of markets at Interactive Investor.

Gold and silver prices have been on a tear in recent months, benefitting from being seen as a safe haven investments during times of geopolitical tensions.

Wall Street's main equity markets wobbled, with the Dow striking a fresh all-time high before turning lower.

The Nasdaq Composite finished down 1.4 percent after spending almost the entire session in negative territory.

"The rotation away from tech began at the beginning of the year and it's kind of building on itself here," said Briefing.com analyst Patrick O'Hare.

"The tech sector had such strong outperformance last year and for several years. There are so much good news that has been priced into the stocks that there's really like zero room for error."

US President Donald Trump signed into law a congressional spending bill to fund government agencies while buying more time for lawmakers to negotiate over spending for the administration's controversial immigration crackdown.

Negotiations had broken down following the killing of two US citizens by federal agents in Minneapolis, the Minnesota city which has become the flashpoint for the Republican president's policies.

In Europe, early gains failed to hold. Frankfurt and London ended the day lower while Paris finished flat.

The euro and the pound rose against the dollar ahead of interest-rate decisions due Thursday from the European Central Bank and Bank of England.

Investors were also keeping an eye on earnings from major companies this week, with particular attention on the tech sector and planned investment in artificial intelligence.

Shares in Palantir, a data and analytics firm that has extensive ties with the US government, jumped 6.8 percent, while robotics firm Teradyne surged 13.4 percent.

Shares in Disney dipped 0.2 percent after it named Josh D'Amaro, head of its theme parks division, to replace Bob Iger as chief executive when he steps down next month.

Asian equities trading was more positive, with sentiment boosted by a rally on Wall Street on Monday following forecast-beating manufacturing data.

That fed through to Asia, where Tokyo closed with a gain of 3.9 percent on Tuesday.

European Union ambassadors on Wednesday (4 February) approved details of a 90 billion euro loan for Ukraine, an initiative agreed by EU leaders in December to meet most of Kyiv's financial needs in 2026-2027 and keep up its fight against Russia's invasion.

The ambassadors reached the agreement at a closed-door meeting in Brussels, diplomats said.

The text of the agreement was not immediately available but the Council of the EU said in a statement that two thirds of the funds would be spent on military aid and one third on general budget support.

On military aid, the deal stipulates that Kyiv should use the loan primarily to buy weapons from Ukraine or the EU but could buy from other countries if certain conditions are met.

"Defence products should in principle only be procured from companies in the EU, Ukraine, or EEA-EFTA countries. Should Ukraine's military needs require the urgent delivery of a defence product which happens not to be available in the EU, Ukraine or an EEA-EFTA country, a set of targeted derogations would apply," the Council said.

The agreement also requires approval by the European Parliament, which diplomats said they hoped would come soon to allow the Commission to start borrowing on the markets and make a first payment to Ukraine in early April.

EU leaders agreed in December to fund the loan through EU borrowing rather than back a plan to use Russian assets frozen in the bloc.

India’s trade pact with the US leaves much to be desired but will ease a crushing overhang on the rupee. Ten months into President Donald Trump’s trade war, the South Asian country is emerging bruised but at least more integrated into the global economy.

Washington is slashing its tariff on imported Indian goods to 18 percent from 50 percent in exchange for a promise from Prime Minister Narendra Modi’s administration to halt buying Russian oil, Trump announced late on Monday, adding that India has committed to buy $500 billion of US-made goods. Modi’s own post did not mention what India has conceded, but it appears to fulfil Washington’s demand for lower Indian tariffs on sectors like autos and includes petroleum and defence goods.

Still, even by Trump’s standards, the arrangement is short on details. Washington’s approach appears slapdash ahead of an expected US Supreme Court ruling on the lawfulness of Trump’s trade regime. As of Tuesday afternoon India time, there was no timeline for when the lower tariff would take effect. The purchasing commitment Trump says India has agreed to also seems absurd: the US currently supplies just $46 billion of India’s $690 billion annual imports, of which only $192 billion is fuel.

Nonetheless, the broad contours were positive enough to support Indian markets: the rupee , the worst-performing Asian currency of 2025, moved over 1 percent higher to 90.37 against the US dollar, while the benchmark Nifty 50 Index of stocks rose 5 percent. The revised tariff imposed by India’s largest trading partner is lower than the 20 percent Washington charges shipments from Vietnam and Bangladesh. That restores a potential advantage for India that global investors first expected back in April. It will also ease fears that the Trump administration will turn hostile on India’s IT services, a much larger-value export to the United States.

New Delhi may eventually rue giving up autonomy on its global energy purchases, a pillar of its attempt to maintain a non-aligned foreign policy. But in the short term, the US pact removes the biggest external roadblock to India’s growth and will reduce the need for the government to borrow more to prop up employment-intensive industries like textiles. One day, India might even thank Trump for spurring it to shore up its trade ties. Including a deal struck last week with the European Union after years of delays, Modi has secured agreements with its two largest markets together taking 36 percent of Indian exports, BNP Paribas analysts note. That’s some consolation for a bullied partner.

US President Donald Trump on February 2 said Washington will slash its tariff on Indian goods to 18 percent from 50 percent in exchange for India halting purchases of Russian oil and lowering trade barriers.

Trump said Indian Prime Minister Narendra Modi also committed that India would buy American goods worth more than $500 billion, including energy, coal, technology, agricultural and other products. Trump did not provide a timeline for those purchases, nor for when the lower tariff would go into effect.

Modi announced the revised US tariff in a separate post on social media platform X, without mentioning any concessions made by India.

The US deal addresses Washington’s ask to cut high Indian tariffs on sectors like autos, petroleum, defence, electronics, pharma, telecom products, aircraft and some agriculture products, and that talks for a more comprehensive deal with more sectors are to continue, an unnamed Indian government official told Reuters on Tuesday.

The Trump administration has been racing to complete framework trade deals with major trading partners before the US Supreme Court rules on whether to strike down Trump’s “reciprocal” tariffs under the International Emergency Economic Powers Act.

JP Morgan said late on Sunday it expects demand from central banks and investors to drive gold prices to $6,300 per ounce by year-end.

Gold extended its fall on Monday to $4,677.17 per ounce, as of 0450 GMT, after falling more than 5 percent earlier in the session to hit its lowest in more than two weeks. Bullion had scaled a record high of $5,594.82 on Thursday.

“We remain firmly bullishly convicted in gold over the medium-term on the back of a clean, structural, continued diversification trend that has further to run amid a still well-entrenched regime of real asset outperformance vs paper assets,” the brokerage said in a note.

JP Morgan now forecasts central-bank gold purchases at 800 tons in 2026, citing an ongoing, unexhausted trend of reserve diversification.

Meanwhile, in silver, with prices at $80 an ounce since late December, the drivers of the continued rally have become harder to pinpoint and quantify, making it more cautious, JPMorgan said.

Spot silver fell over 6 percent to $78.90 an ounce on Monday. It hit a record high of $121.64 on Thursday before touching a near one-month low on Friday.

Moreover in the case of silver, without central banks as structural dip buyers as in gold, there remains the risk for a further move back higher in the gold-to-silver ratio in the coming weeks, the brokerage added.

“We still do see a higher floor for silver on average (around $75-$80/oz) for now vs our previous expectations as, even after overshooting in its catch-up to gold, silver is unlikely to fully relinquish its gains,” JP Morgan said.

Global inflation is expected to fall to 3.8% this year and to 3.4% in 2027, helped by softer demand and lower energy prices, the IMF chief said on Monday.

Managing Director Kristalina Georgieva said in a speech in the Annual Arab Fiscal Forum in Dubai that global growth has held up 'remarkably well' amid profound shifts in geopolitics, trade policy, technology, and demographics.

Nestlé is managing a food safety issue in Hong Kong after the recall of 22 batches of baby milk formula, following the detection of a toxin produced by the Bacillus cereus bacterium, the company and local authorities said.

Recent follow-up investigations by the Centre for Food Safety (CFS) confirmed the presence of cereulide in five samples from the recalled batches. This marks the second detection of the toxin since the products were initially removed from store shelves, says the South China Morning Post.

The affected products include Nan INFINIPRO2 7HMO (800g), Nan PRO 1 2HMO (800g), and Illuma LUXA 1 (800g), with cereulide levels ranging from 0.2 to 1.3 micrograms per kilogram. Nestlé identified the source of contamination as an ingredient supplied to the company for these batches.

Cereulide is heat-stable, meaning it can survive standard preparation or processing temperatures, raising concerns about potential exposure.

The recall, which began in early January as a precautionary measure following similar actions in Europe, eventually covered 22 batches in Hong Kong.

The CFS said it continues to conduct follow-up investigations to ensure the safety of the recalled products.

BYD's vehicle sales fell by 30.1 percent in January from a year earlier, the fifth straight month of decline, as the Chinese electric vehicle maker navigates external uncertainties and tough competition at home.

The automaker sold 210,051 vehicles globally last month, a stock market filing on Sunday showed. The export volume of new energy vehicle was at 100,482 units for the month of January.

Its production was down 29.1 percent, extending a losing streak which began July last year.

At home, BYD launched upgraded new versions of a number of plug-in hybrid models with long-range batteries last month, aiming to boost the appeal of its affordable hybrid models.

Sales of plug-in hybrid cars, which made up more than half of BYD's total car sales, fell 28.5 percent in January, extending a trend after they fell 7.9 percent in 2025.

BYD said in January it has targeted 1.3 million vehicles in overseas shipments for this year, suggesting a 24 percent increase from 2025 but lower than an earlier goal of up to 1.6 million vehicles its management told Citi in a meeting in November.

The company did not give reasons for the downward revision.

Its new EV plant in Hungary is expected to come online this year, adding to its manufacturing in Brazil and Thailand. It also has planned assembly plants in Indonesia and Turkey.

A 150.7 percent surge in sales abroad helped BYD unseat Tesla as the world's top EV vendor last year, offsetting mounting pressure in its home market, notably from Geely and Leapmotor in the budget segment.

BYD narrowly met its slashed global sales target of 4.6 million units last year. It has not announced the 2026 target.

The world's largest auto market is expected to deal with stagnation this year as the Chinese government scales back subsidies for trading in lower-priced models, weighing on BYD and its peers betting on budget cars.

Chinese officials are promoting the launch of a free-trade port on the tropical island of Hainan as a major step in opening the economy to foreign investors, even as global trade tensions rise and protectionism increases elsewhere.

Officials describe the transition to what they call the world's largest free-trade port as a "substantial leap" in China's efforts to open its markets to foreigners. The move, which took effect in December, allows most goods to enter the island without tariffs and offers lower taxes for companies and high earners, says the Economist.

The free-trade port (FTP) covers an area nearly the size of Taiwan and is about 30 times larger than Hong Kong. Some analysts initially speculated that Beijing aimed to create a new Hong Kong-style hub after President Xi Jinping announced the plan in 2018, though officials say Hainan's ambitions are more limited.

Under the new rules, 74% of goods can enter Hainan tariff-free. Products can be shipped to the mainland without levies if they undergo processing on the island that adds at least 30% of their value. Taxes on firms in strategic sectors and on high earners are capped at 15%, compared with rates of up to 35% and 45% on the mainland. Citizens from 86 countries, including the United States, are eligible for visa-free entry.

Despite policy support, Hainan faces challenges in shedding a long-standing reputation as an economic backwater. Designated China's only province-wide special economic zone in 1988, it has struggled to deliver sustained growth beyond tourism.

In 2024, Hainan's GDP per capita was about 76,000 yuan ($10,900), below the national average and behind most other special economic zones. The province's total GDP, about $114 billion, was among the lowest in China, hindered in part by limited infrastructure links to the mainland.

Supporters argue the island's geographic isolation could be an advantage, allowing Beijing to test reforms without disrupting other parts of the country. One closely watched pilot allows firms to apply for less restricted internet access, enabling users to visit sites such as Google and X that are blocked on the mainland.

President Xi has described the creation of the FTP as a "landmark" move to promote "an open world economy." Li Daokui, a Tsinghua University professor and government adviser, said the experiment would be closely monitored.

"This youngest and bravest student in a cohort is given permission to swim in the deep water," Li said. "Then the whole class would watch what Hainan would do."

Medical tourism is one area the province hopes will benefit. In Boao Hope City, private hospitals are allowed to use foreign-approved drugs and devices not yet authorised in China. Some facilities have struggled to attract patients, while others cater to wealthy Chinese clients.

Manufacturing firms have also shown interest. Mixue, a Chinese beverage chain, has opened a factory to import coffee beans tariff-free and sell processed products on the mainland without additional duties. Swire Pacific is building a Coca-Cola bottling plant for the China market.

However, some executives remain sceptical. "The business case is just not there," said an auto industry executive, citing a lack of talent and well-integrated supply chains.

Local authorities have sponsored visits for potential investors. Lei Jun moved his video-game design firm from Fujian province to Hainan after such a trip, saying he was "won over by the climate and subsidies."

Service industries may offer more immediate opportunities. Chi Fulin, president of the China Institute for Reform and Development, said "Hainan will lead the opening up of the country's service sector."

But he cautioned that change would take time. "You might say that Hainan, where people wear down jackets on top and flip-flops below, has a lot of inertia," Chi said. "Changing these habits is a long-term process. But if the overall environment changes drastically, if it snows heavily, can you still wear flip-flops?"

Sediment containing rare earth was retrieved from ocean depths of 6,000 metres (20,000 feet) on a Japanese test mission, the government said Monday, as it seeks to curb dependence on China for the valuable minerals.

Japan says the mission was the world's first bid to tap deep sea rare earths at such a depth.

"Details will be analysed, including exactly how much rare earth is contained" in the sample, government spokesman Kei Sato said, calling it "a meaningful achievement both in terms of economic security and comprehensive maritime development".

The sample was collected by a deep-sea scientific drilling boat called the Chikyu that set sail last month for the remote island of Minami Torishima in the Pacific, where surrounding waters are believed to contain a rich trove of valuable minerals.

It comes as China -- by far the world's biggest supplier of rare earths -- ramps up pressure on its neighbour after Prime Minister Sanae Takaichi suggested in November that Tokyo may react militarily to an attack on Taiwan, which Beijing has vowed to seize control of by force if necessary.

Beijing has blocked exports to Japan of "dual-use" items with potential military uses, fuelling worries in Japan that Beijing could choke supplies of rare earths, some of which are included in China's list of dual-use goods.

Rare earths -- 17 metals difficult to extract from the Earth's crust -- are used in everything from electric vehicles to hard drives, wind turbines and missiles.

The area around Minami Torishima, which is in Japan's economic waters, is estimated to contain more than 16 million tons of rare earths, which the Nikkei business daily says is the third-largest reserve globally.

These rich deposits contain an estimated 730 years' worth of dysprosium, used in high-strength magnets in phones and electric cars, and 780 years' worth of yttrium, used in lasers, the Nikkei said.

"If Japan could successfully extract rare earths around Minami Torishima constantly, it will secure domestic supply chain for key industries," Takahiro Kamisuna, research associate at The International Institute for Strategic Studies (IISS), told AFP.

"Likewise, it will be a key strategic asset for Takaichi's government to significantly reduce the supply chain dependence on China."

Beijing has long used its dominance in rare earths for geopolitical leverage, including in its trade war with US President Donald Trump's administration.

China accounts for almost two-thirds of rare earth mining production and 92 percent of global refined output, according to the International Energy Agency.

US President Donald Trump today (3 February) announced that India and the United States have agreed to a bilateral trade deal, capping months of hard negotiations.

In a post on his social media platform Truth Social, Trump wrote that under the deal, which takes effect immediately, the US would reduce reciprocal tariff from 25% to 18% and India would cut its tariff and non-tariff barriers against the US to zero.

"Out of friendship and respect for [Indian] Prime Minister Modi and, as per his request, effective immediately, we agreed to a Trade Deal between the United States and India, whereby the United States will charge a reduced reciprocal tariff, lowering it from 25% to 18%.

"They will likewise move forward to reduce their Tariffs and Non Tariff Barriers against the United States, to zero," Trump wrote.

Trump said the Indian premier also committed to "buy American" at a much higher level, in addition to over $500 billion in energy, technology, agricultural, coal and many other products.

Trump's announcement of the deal came after a phone call with Modi earlier today.

Trump further said, "Our amazing relationship with India will be even stronger going forward. Prime Minister Modi and I are two people that get things done, something that cannot be said for most. Thank you for your attention to this matter!"

Ahead of the announcement, Trump spoke to Modi, American Ambassador to India Sergio Gor said in a post on X.

The deal comes after several months of negotiations since March 2025. In the interregnum, the Trump administration levied a steep 50% tariff on Indian exports to the US, including 25% for India's purchase of Russian crude oil, which the US claimed was indirectly financing Russia's war against Ukraine.

Trump wrote on Truth Social, "It was an honor to speak with Prime Minister Modi, of India, this morning. He is one of my greatest friends and a powerful and respected leader of his country.

"We spoke about many things, including trade and ending the war with Russia and Ukraine. He agreed to stop buying Russian Oil and to buy much more from the United States and, potentially, Venezuela. This will help end the war in Ukraine, which is taking place right now, with thousands of people dying each and every week!"

India has maintained throughout the negotiations with the US that its agriculture and dairy sectors would continue to be protected.

The India-US trade deal comes just days after India and the EU announced a Free Trade Agreement that New Delhi and Brussels called the "mother of all" trade deals.

While the European Union is India's largest trading partner as an economic bloc, the US remains India's single largest trading partner.

Modi, for his part, wrote on his X, "Wonderful to speak with my dear friend President Trump today. Delighted that made-in-India products will now have a reduced tariff of 18%. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement."

However, there is no word from Modi on India bringing down India's tariff against US imports to zero.

Modi said, "When two large economies and the world's largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation."

He said Trump's leadership "is vital for global peace, stability and prosperity. India fully supports his efforts for peace".

"I look forward to working closely with him to take our partnership to unprecedented heights," the Indian PM added.

India has increased its defence budget by 15% to Rs 7.84 lakh crore for the 2026–27 financial year, as the country plans major procurement programmes, including contracts for Rafale fighter jets, submarines and unmanned aerial vehicles.

The allocation marks a sharp rise from Rs 6.81 lakh crore in the 2025–26 financial year.

Of the total outlay, the armed forces will receive Rs 2.19 lakh crore for modernisation under the capital budget, reflecting a 21.84% increase from Rs 1.80 lakh crore in the previous fiscal year.

Under capital expenditure, Rs 63,733 crore has been earmarked for aircraft and aero engines, while Rs 25,023 crore has been allocated for strengthening the naval fleet.

In another boost to the defence sector, Finance Minister Nirmala Sitharaman, while presenting the budget in parliament, announced an exemption of basic customs duty on imported raw materials used in manufacturing aircraft parts for maintenance, repair and overhaul activities in defence units.

Saudi Arabia has taken regulatory steps affecting religious tourism and wildlife management in early February 2026, alongside a range of regional and international developments.

The Saudi Ministry of Hajj and Umrah has suspended contracts with around 1,800 foreign Umrah travel agencies, nearly one-third of the approximately 5,800 agencies operating in the sector. The move followed a performance review that found shortcomings in service quality and non-compliance with approved standards, says Arab News.

The affected agencies have been given a 10-day grace period to rectify their status and meet classification requirements in order to have their contracts reinstated. The suspension applies only to the issuance of new visas, while pilgrims who already hold valid visas or confirmed reservations will continue to receive services as planned. The ministry said the measure is intended to protect the rights of Umrah performers and ensure reliable and continuous services.

Separately, Saudi Arabia's National Center for Wildlife announced the conclusion of the 2025–2026 hunting season on 31 January. The season, which began in September 2025, was regulated under updated mechanisms based on research and international best practices. Authorities said the framework was designed to support the sustainable use of natural resources and maintain ecological balance in line with the Kingdom's Environmental Law.

In sports developments, Spain's Carlos Alcaraz defeated Serbia's Novak Djokovic to win his first Australian Open title. Riyadh also hosted a WWE Royal Rumble event, with Roman Reigns and Liv Morgan emerging as winners.

In religious services, the Grand Mosque introduced a dedicated Ramadan plan for women, while Indonesia announced it would deploy a record number of women officers to assist Hajj pilgrims.

On the international front, Pakistan condemned what it described as Israel's latest ceasefire violations and called for advance food imports ahead of Ramadan to reduce pressure on its ports.

In the economic sector, Saudi Arabia's Housing Ministry said it offered more than 21,000 investment opportunities in 2025, with contract values exceeding $3.35 billion.

Bitcoin, the world’s largest cryptocurrency by market value, was down by 6.53 percent at $78,719.63 at ​12:48 p.m. ET (1748 GMT) on Saturday, continuing its decline from the ‌previous session.

On Friday, bitcoin fell to as low as $81,104, the lowest since November 21, while the US dollar gained after former Federal Reserve Governor Kevin Warsh was selected as the next Fed chair. Some investors and ‌traders are concerned he might tighten up on cash in the ​financial system.

Warsh has called for regime change at the central bank and wants, among other things, a smaller Fed balance sheet.

Bitcoin and other ‍cryptocurrencies have been regarded as beneficiaries of a large balance sheet, ‍having tended to rally while the Fed greased money markets with liquidity - a support for ‌speculative ‌assets.

Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin, said the Fed’s “bloated ‍balance sheet combined with heavy-handed bank regulation” had kept liquidity trapped on Wall Street instead ‌of ‌flowing to Main Street, helping fuel bubbles in assets such as bonds, crypto, metals and meme stocks.

Ether also fell 11.76 percent to $2,387.77 on Saturday afternoon. Cryptocurrencies have been struggling for direction since tumbling last year, having been left behind by big rallies in gold and stocks.

“Sometimes these ​price adjustments feed on themselves,” Jacobsen said, adding that Friday’s abrupt drop had reminded people of the risks. He said it was “possible, if not likely, that we see more ‍selling over the next few days.”

Cryptos are having a rough time in what was once hoped to be a golden era of flows and friendly regulation under President ​Donald Trump. Market-leading bitcoin has lost a third ‍of its value since striking record highs in October last year.

US President Donald Trump on Saturday said India will buy Venezuelan oil, helping to replace some of the Russian oil that the world’s third-biggest oil importer buys.

“We’ve already made that deal, the concept of the deal,” Trump told reporters aboard Air Force One as he traveled to his vacation home in Florida from Washington.

Reuters reported on Friday that the United States has told Delhi it could soon resume purchases of Venezuelan oil to help replace imports of Russian oil, citing three people familiar with the matter. India stopped buying oil from Caracas last year after Trump in March imposed a 25 percent tariff on countries buying Venezuelan oil.

In his comments on Saturday, Trump said India would buy Venezuelan oil instead of Iranian crude. However, New Delhi stopped loading oil from Iran in 2019 due to US sanctions over Tehran’s nuclear programme.

Indian refiners turned to US oil to make up for the loss of Iranian supply, then curbed US purchases and became the top buyer of Russian seaborne oil sold at a discount after Western nations imposed sanctions on Moscow for its invasion of Ukraine in 2022.

Trump in August doubled duties on imports from India to 50 percent to pressure New Delhi to stop buying Russian oil, and earlier this month said the rate could rise again if it did not curb its purchases.

However, Treasury Secretary Scott Bessent signaled in January that the additional 25 percent tariff on Indian goods could be removed, given what he called a sharp reduction in Indian imports of Russian oil.

The US government this week lifted some sanctions on Venezuela’s oil industry to make it easier for US companies to sell its crude oil.

Trump’s comments on Saturday appeared to reflect continued improvement in US-India relations, which have been tense throughout the past year.

Trump also said China could make a deal with the US to buy Venezuelan oil.

“China is welcome to come in and would make a great deal on oil,” Trump said, without providing any details.

India's budget for the fiscal year 2026-27 presented in parliament today (1 February) slashed developmental aid to Bangladesh by 50%, amid a sharp downturn in bilateral ties post-Sheikh Hasina's ouster from power.

This marks the steepest reduction in regional aid, triggered by a diplomatic freeze, allegations of attacks on minorities, and Dhaka's tilt toward Pakistan.

For the next fiscal beginning in April, the budget's allocation for Bangladesh has been pegged at Rs60 crore as against Rs120 crore for FY26. In fact, the revised estimate of the aid to Bangladesh in FY26 budget has been pegged at Rs34.48 crore as ties between the two sides remained frosty.

Bhutan was allocated the largest share of Rs2,288 crore as development aid in the budget for FY27 followed by Rs800 crore to Nepal and Rs550 crore each to the Maldives and Mauritius.

Bhutan remains the largest recipient of Indian aid and sees its allocation rise by Rs138 crore to Rs2,288 crore from Rs2,150 crore in the previous budget of FY26.

The aid for the Maldives saw a drop of Rs50 crore to Rs500 crore while the same to Mauritius saw a 10% rise. Myanmar's allocation falls 14% to Rs300 crore.

In continuation with India's warming up of relationship with Afghanistan, an allocation of Rs150 crore has been made in the new budget to that country. The allocation to Afghanistan for FY26 was Rs100 crore.

Sri Lanka has been allocated Rs400 crore and Rs300 crore was set aside for Myanmar in the budget for FY27. The aid for Afghanistan, Sri Lanka and Nepal saw a marginal increase in allocation.

In a break from the last few years, no allocation has been made in the new budget for the Chabahar port project in Iran. In the budget last year, an amount of Rs100 crore was set aside for the project and the amount increased to Rs400 crore in the revised estimate.

The budget allocated a total of Rs22,118 crore to the Ministry of External Affairs (MEA) as against the current fiscal's budget estimate of Rs20,516 crore and revised estimate of Rs21,742 crore.

The total overseas development partnership portfolio for FY26 was pegged at Rs6,997 crore, which is little over 31% of the allocation made to the MEA.

Out of the total allocation under the overseas development partnership portfolio, Rs4,548 crore has been earmarked for immediate neighbours.

The amount is expected to be spent towards implementation of a variety of initiatives ranging from large infrastructure projects such as hydroelectric plants, power transmission lines, housing, roads, bridges to small-scale grass-roots level community development projects, according to officials.

India's total foreign grants hit Rs5,685 crore in FY26, according to budget papers.