China’s headline 5 % GDP growth for 2025 looks impressive—until you see the scaffolding holding it up. A record-high US $1.2 trn trade surplus and a 5.5 % export surge masked a fourth-quarter slowdown to 4.5 % and the weakest retail-sales rise since COVID curbs were lifted. (apnews.com)

Beijing’s reliance on external demand is deepening just as the political climate for trade worsens. The U.S. share of Chinese exports has already fallen to 11 %; if Europe follows Washington’s tariff lead, that surplus becomes a vulnerability, not a cushion. Meanwhile, only 7.9 m births last year—another historic low—signal a shrinking domestic consumer base eerily reminiscent of Japan’s 1990s demographic drag. (amp.dw.com)

Unless policymakers pivot from factory-first stimulus to household income support, China risks “doubling down on yesterday’s growth model,” as historian Adam Tooze warns. An aging population and protectionist headwinds could turn 5 % into a ceiling, not a floor, for the world’s second-largest economy—and the ripple effects will hit everything from German machinery orders to African commodity prices. (ft.com)

“Demography is destiny—unless policy dares to prove otherwise.” —Adam Tooze

The Gist AI Editor

Dragon’s New Blueprint

Beijing is recalibrating its economic strategy, acknowledging a fundamental imbalance between its formidable production capacity and lagging internal consumption (WSJ). State planners are now architecting a five-year plan squarely aimed at boosting domestic demand, a tacit admission that relying on an export-led model is reaching its limits. This internal focus is complemented by a diplomatic détente with the UK, establishing a new joint forum to de-escalate tensions over cyberattacks (Bloomberg). The move signals a pragmatic approach to managing friction with Western powers, even as Chinese state-linked firms like China Tourism Group Duty Free expand their footprint by acquiring assets from Western luxury giants like LVMH (WSJ). Our view: This is a classic authoritarian pivot—stoke nationalism and internal consumption when external markets become less reliable.

Davos Under Duress

President Trump’s renewed commentary on Greenland has thoroughly upended the agenda at the World Economic Forum in Davos, sidelining discussions on Ukraine and injecting fresh anxiety into transatlantic relations (Politico.eu). His remarks, linking NATO defense spending to potential U.S. tariffs, have refocused the summit’s narrative from Russian aggression to the perceived unpredictability of its most powerful ally. European leaders are now grappling with an agenda dictated not by shared priorities but by Washington’s transactional diplomacy. This shift underscores the growing apprehension in European capitals about the reliability of longstanding security architectures and the potential for economic leverage to be used within the Western alliance.

Europe’s Unseen Sentinels

Amidst the high-level statecraft, a more granular view of European security is emerging. There’s a growing recognition that non-military assets, such as national fishing fleets, serve as crucial, informal intelligence-gathering networks in strategic waters (Politico.eu). These civilian fleets function as a de facto deterrent and an early-warning system against gray-zone threats. This perspective aligns with a broader strategic argument that Europe’s real power projection may lie less in traditional military hardware and more in the shrewd application of economic and civilian leverage, using capital flows and regulatory power as primary tools of influence (Bloomberg). It’s a reminder that in modern geopolitics, power is diffuse and often resides where it’s least expected.

Stay tuned for the next Gist—your edge in a shifting world.

Chinese Policymakers Look Focused on Domestic Demand to Lift Economy
— Wall Street Journal

China’s CTG Duty Free to Buy LVMH’s DFS Greater China Stores
— Wall Street Journal

Citi Remains Tactically Bullish on Precious Metals in Short Term
— Wall Street Journal

UK and China Set Up Forum on Cyberattacks to Lower Tensions
— Bloomberg

Brazilian Judge Orders Tanure’s Assets Frozen in Banco Master Probe
— Bloomberg

Greenland Isn’t as Big as It Looks in ‘Risk’
— Bloomberg

Davos Confronts Trump’s Arctic Gambit

The World Economic Forum is opening under the shadow of a deepening transatlantic fissure, with President Trump’s focus on Greenland upending the agenda (Politico, Financial Times). The issue, escalating from a bilateral dispute into a serious stress test for NATO, is forcing European leaders to abandon planned talks on Ukraine to formulate a unified response to US tariff threats. Trump has threatened to impose a 10% tariff on eight European nations, rising to 25% if a deal on Greenland isn’t reached (NPR). The rhetoric is already creating economic ripples; Asian markets fell on the news, with Japan’s Nikkei sliding as investors moved toward safe-haven assets (Asia Financial). The focus now shifts to Commission President von der Leyen and France’s Macron, whose speeches today are expected to signal Europe’s stance against perceived American overreach (Politico).

Kyiv’s Infrastructure Under Renewed Assault

While Western leaders confer in the Alps, Russia has unleashed a fresh wave of attacks on Ukraine. Overnight drone and missile strikes targeted the capital, Kyiv, causing significant disruptions to power and water supplies amid freezing temperatures (ZDF, The Kyiv Independent). According to city officials, the attacks damaged non-residential buildings, set cars ablaze, and left at least one person injured. These strikes on critical civilian infrastructure are a stark reminder of the brutal conventional conflict on Europe’s eastern flank. The deliberate targeting aims to cripple the state and demoralize the population, underscoring a war of attrition that continues to demand Europe’s sustained material commitment, irrespective of diplomatic dramas elsewhere.

Catch the next Gist for the continent’s moving pieces.

Società Dante Alighieri e ministero dell’Istruzione insieme per la lingua italiana
— Ansa

Die Welt blickt auf Davos
— Politico Europe

Aktuelles zum Krieg in der Ukraine
— ZDF

Der Machtkampf um die Arktis in Karten
— ZDF

Spanien: Viele Tote und Verletzte bei Zug-Entgleisung
— ZDF

Australian Open: Collignon si ritira, Musetti vince e aspetta Sonego
— Ansa