Core Viewpoint - The article discusses the concept of a sugar tax as a potential policy tool in China, drawing on international experiences and historical context to advocate for its implementation to improve public health and generate revenue [2][3]. Group 1: What is Sugar Tax? - Historically, sugar tax was akin to a luxury tax, primarily targeting the wealthy to generate fiscal revenue [13]. - Contemporary sugar tax resembles tobacco tax, specifically targeting sugar-sweetened beverages (SSBs) to promote healthier consumption and correct market externalities, with a focus on public welfare [4][16]. Group 2: Should Sugar Tax be Implemented? - The article highlights the regressive nature of sugar tax, disproportionately affecting low-income households who consume more sugary drinks [5][26]. - It cites the U.S. experience where 99% of sugar tax revenue is allocated, with 95% used for community health investments, and 85% directed back to affected communities [5][26]. Group 3: How to Implement Sugar Tax? - The article suggests that the sugar tax should at least lead to a 20% increase in retail prices to be effective [6][31]. - It discusses various taxation methods, primarily excise tax, and emphasizes the need for a clear basis for taxation, preferably based on the sugar content of beverages [6][30]. Group 4: Revenue Potential of Sugar Tax in China - The article estimates that a sugar tax of 10% to 30% could generate approximately 700 to 2000 billion yuan annually, contributing 4% to 12% of total consumption tax revenue [8][34]. - It provides a detailed breakdown of potential revenue from both production and retail stages, indicating significant fiscal benefits from implementing such a tax [34][40].

Group 1 - The provincial two sessions are typically held before the Lunar New Year, with 17 provinces confirming meetings in January, representing 57.3% of the national GDP for 2024 [1] - Among the six major economic provinces, four will hold their sessions in January, which collectively account for 44.4% of the national GDP [1] - Zhejiang will kick off the sessions on January 14, followed by Henan, Shandong, and Guangdong on January 26, while Jiangsu is scheduled for early February [1] Group 2 - The focus of the provincial two sessions includes setting GDP targets for the next five years, with Changsha establishing a range of 5%-5.5% annual growth, down from the previous target of around 7% [2] - Historical data shows that the weighted GDP targets of the 31 provinces are consistently higher than the national target by 0.3-0.6 percentage points from 2022 to 2025 [2] - The CPI targets are generally aligned with the national target, with Wuhan maintaining a target around 2% and Changsha lowering its target from around 3% to around 2% [3] Group 3 - Employment targets are assessed by comparing the total across the 31 provinces to the previous year, with Wuhan's new employment target remaining consistent with last year [3] - The growth rate of major projects in economic provinces is a key observation point, with previous years showing limited project increases, indicating potential investment momentum issues [3] - Other areas of interest include real estate investment, service consumption statements from provinces, and local consensus on industrial policies [3]

Monetary Policy - The central bank emphasizes a flexible and efficient use of various monetary policy tools, including reserve requirement ratio (RRR) cuts and interest rate reductions, to maintain relatively loose social financing conditions and guide reasonable growth in financial totals and balanced credit issuance [2][13] - The focus on supporting key areas such as expanding domestic demand, technological innovation, and small and medium-sized enterprises (SMEs) has been reinforced [2][13] Consumption - The Ministry of Commerce highlights a shift towards prioritizing service consumption and optimizing the implementation of the old-for-new consumption policy, aiming to accelerate the cultivation of new growth points in service consumption [2][16] - The previous year's focus was on expanding the scope of the old-for-new policy and innovating diverse consumption scenarios [2][16] Real Estate - The central bank's annual meeting did not mention real estate in the context of risk prevention, focusing instead on local debt risks and risks associated with small financial institutions [3] Foreign Trade - The Ministry of Commerce emphasizes structural optimization in foreign trade, with a detailed approach to foreign-related security deployments, including promoting trade innovation and encouraging service exports [3][16] - The focus has shifted from merely stabilizing foreign trade to fostering high-quality development and expanding new foreign trade drivers [3][16] Industry - The Civil Aviation Administration and the Postal Administration both address the need to strengthen and innovate macro-control to prevent "involution" competition within industries [4] - The Ministry of Natural Resources stresses the importance of enhancing strategic mineral resource security and monitoring risks [4] Social Welfare - The National Health Commission proposes optimizing childbirth support policies and promoting integrated development of childcare services, while the Ministry of Civil Affairs emphasizes implementing comprehensive elderly care consumption subsidy projects [4] - The Ministry of Education outlines initiatives for revitalizing ordinary high schools in counties and advancing artificial intelligence education across all school levels [4] Recent Policy Developments - The Ministry of Finance announced adjustments to export tax rebate policies for photovoltaic products, with a phased reduction in VAT export rebates starting from April 2026 [5][14] - The Ministry of Industry and Information Technology issued implementation opinions for the "Artificial Intelligence + Manufacturing" initiative, aiming for significant advancements in AI applications within the manufacturing sector by 2027 [5][15]

Core Viewpoint - The article discusses the weak employment growth in the U.S. for December 2025, highlighting a significant decline in non-farm payrolls and the unexpected drop in the unemployment rate, while analyzing the contributing factors and implications for monetary policy [2][4][24]. Employment Data Summary - Non-farm payrolls for December 2025 increased by only 50,000, below the expected 70,000, with private sector jobs rising by 37,000 against an expectation of 75,000. The previous two months' data were revised downwards by a total of 76,000 [2][24]. - Employment growth was primarily concentrated in education and healthcare services (+41,000) and leisure and hospitality (+47,000), while sectors like retail, construction, and manufacturing saw job losses [2][26]. Unemployment Rate Analysis - The unemployment rate unexpectedly fell to 4.4% from a previous 4.5%, with labor force participation decreasing slightly from 62.46% to 62.40%. This decline was attributed to job growth and a slight contraction in labor supply [2][30]. - The household survey indicated an increase in total employment by 232,000, with a decrease in unemployment by 78,000, reflecting a complex labor market dynamic [30][33]. Wage and Hourly Earnings Insights - Private sector hourly wage growth met expectations, rising by 0.3% month-on-month and 3.8% year-on-year, while weekly hours worked decreased from 34.3 to 34.2, remaining at historically low levels [2][35]. - The stability in weekly earnings suggests a lack of growth despite the increase in hourly wages, indicating potential underlying weaknesses in labor demand [35]. Market Reaction and Interest Rate Expectations - Following the employment report, market expectations for interest rate cuts have cooled, with futures pricing indicating a reduction from 2.266 to 2.087 cuts expected this year, with the first anticipated in June and the second in December [3][37]. - U.S. stock markets experienced slight gains, while bond yields remained stable, reflecting a cautious optimism in response to the employment data [3][37]. Structural Factors Affecting Employment - The article identifies several structural factors contributing to weak employment growth, including federal government layoffs (approximately 28,000 jobs), tightening immigration policies (around 33,000 jobs), and potential layoffs due to AI (estimated at 6,500 jobs per month) [4][10][21]. - The remaining employment weakness, estimated at 48,000 jobs, is attributed to a general decline in labor demand, influenced by restrictive monetary policy and fiscal tightening [21][23]. Implications for Federal Reserve Policy - A monthly job growth of around 100,000 is seen as a critical threshold for assessing Federal Reserve policy direction. If job growth stabilizes at this level, it may reduce the need for further rate cuts [6][23]. - The article suggests that if employment continues to grow steadily, the Fed may pause rate cuts, while rapid recovery above 100,000 jobs could eliminate the necessity for further reductions [6][23].

Overall Situation: Low-Level Bottoming - In December 2025, the price indicators continued to improve, with CPI year-on-year rising from 0.7% to 0.8%, and PPI narrowing from -2.2% to -1.9% [2][11] - For the year 2025, CPI is expected to be 0%, slightly lower than the 0.2% in 2023 and 2024, while PPI is projected at -2.6%, lower than -2.2% in 2024 [12][11] CPI: From General Weakness to Structural Improvement - CPI was reclassified into categories: food (approx. 19% weight), competitive goods (approx. 26%), competitive services (approx. 19%), rent (approx. 15%), and government-controlled goods and services (approx. 21%) [15][18] - The cumulative CPI growth for 2023-2024 averaged -0.1%, indicating a general price weakness influenced by production capacity cycles and domestic supply-demand imbalances [19][18] - In 2025, CPI cumulative growth is expected to be 0.8%, showing structural improvement, driven by rising prices in food (1.1%) and gold jewelry (68.5%) [20][21] PPI: Accelerated Decline Followed by Stabilization - In the first half of 2025, PPI showed a month-on-month decline of -0.3%, while in the second half, it stabilized with a month-on-month average of 0% [5][23] - The price of various industry chains, particularly in non-ferrous metals, is expected to improve due to macroeconomic factors and domestic capacity management [24][23] Outlook for 2026: Mild Year-on-Year Recovery - CPI and PPI are expected to see mild year-on-year recoveries, with CPI projected at approximately 0.8% and PPI at around -1% [26][27] - Potential drivers for CPI improvement include rising prices in food and competitive goods, particularly gold jewelry, and healthcare services [27][28] December 2025 Inflation Data Review - CPI rose from 0.7% to 0.8%, with food prices increasing from 0.2% to 1.1%, while energy prices fell from -3.4% to -3.8% [29][30] - Core CPI remained stable at 1.2%, with significant increases in gold jewelry prices and household goods [29][30]

Key Points - The article discusses recent economic data from the US, Japan, and the Eurozone, highlighting mixed signals in employment, inflation, and consumer confidence [2][5][15] - It emphasizes the importance of monitoring economic indicators such as the ADP employment numbers, JOLTs job openings, and ISM manufacturing and services PMIs to gauge economic health [5][15] - The article notes that while US consumer confidence has reached a four-month high, employment figures have shown signs of weakness, indicating potential economic challenges ahead [5][15] Group 1: Important Data Review - US December ADP employment numbers were below expectations, with a growth of 41,000 jobs compared to an expected 50,000 [15] - The US trade deficit narrowed to $29.4 billion in October, significantly lower than the expected $58.5 billion [15] - The ISM services PMI rose to 54.4 in December, exceeding expectations, while the manufacturing PMI fell to 47.9, indicating continued contraction [15] Group 2: Economic Activity Index - The US WEI index fell to 2.13% for the week ending January 3, down from 2.49% the previous week, indicating a decline in economic activity [19] - The German WAI index increased to 0.07% for the week ending January 4, up from 0.05% the previous week, suggesting a slight improvement in economic conditions [19] Group 3: Demand - The US Redbook retail sales year-on-year growth rate decreased to 7.1% for the week ending January 3, down from 7.6% the previous week [23] - The US mortgage rates increased slightly to 6.16% for a 30-year fixed mortgage, while mortgage applications rose, with the MBA market composite index reaching 270.8, a 0.3% increase from the previous week [26][27] Group 4: Employment - The ADP weekly employment numbers showed a decline, with a four-week cumulative increase of 46,000 jobs, down from 70,000 the previous week [32] - Initial jobless claims rose to 208,000 for the week ending January 3, up from 200,000 the previous week [33] - The INDEED job vacancy index increased to a weekly average of 104.8, indicating a rise in job openings [36] Group 5: Prices - The RJ/CRB commodity price index rose to 301.47, reflecting a 1.2% increase from the previous week [42] - US gasoline retail prices fell to $2.68 per gallon, a decrease of 0.3% from the previous week [42] Group 6: Financial Conditions - Financial conditions in the US and Eurozone remain loose, with the Bloomberg financial conditions index for the US rising to 0.863 from 0.795 the previous week [47] - Offshore dollar liquidity showed improvement for the yen against the dollar, while the euro against the dollar deteriorated [49] - The 10-year US-EU government bond yield spread widened to 126.8 basis points, up from 121.5 basis points the previous week [52]

Core Viewpoint - The article discusses the current economic trends in China, highlighting both positive and negative indicators, including the performance of the macroeconomic WEI index, consumer demand, production levels, trade activities, and price movements in various commodities [2][3][4][25][36]. Group 1: Economic Indicators - The Huachuang Macro WEI index has risen to 6.05% as of January 4, up by 0.46 percentage points from the previous week [2][9]. - In the first week of January, subway passenger volume in 26 cities increased by 6% year-on-year, while domestic flight operations averaged 12,400 flights per day, a decrease of 0.6% year-on-year [2][15]. - Container throughput at Chinese ports rebounded slightly, with a week-on-week increase of 6.3% as of January 5, and a year-on-year increase of 7.7% [2][25]. Group 2: Consumer Demand - Real estate sales have seen a significant decline, with a 43% year-on-year drop in transaction area for commercial housing in 67 cities during the first ten days of January, compared to a 24% decline in December [3][16]. - The average land premium rate across 100 cities fell to 0.45% as of January 4, down from 1.64% in December [3][16]. Group 3: Production Trends - Construction activity is declining, with cement shipment rates dropping to 29% as of January 2, down 2.4 percentage points from the previous week [3][18]. - The operating rate of asphalt plants also decreased to 25.4% as of January 7, down 2 percentage points week-on-week [3][18]. Group 4: Trade Activities - Container throughput at ports showed a slight rebound, with a week-on-week increase of 6.3% as of January 5, and a year-on-year increase of 7.7% [2][25]. - The number of outbound vessels from Chinese ports increased by 42.1% year-on-year in the first ten days of January [25]. Group 5: Price Movements - Prices of gold, copper, and oil have all risen, with COMEX gold reaching $4,473 per ounce (up 3.6%), LME copper at $12,990 per ton (up 3.8%), and Brent crude oil at $63.3 per barrel (up 4.3%) [2][36]. - Lithium carbonate prices surged by 15.6% in the same period [36].

Core Viewpoints - The internal demand remains weak in December due to base effects and policy timing, but it is expected to recover in early 2026 as expansionary policies are introduced [2][3] GDP - The GDP growth rate for the fourth quarter is projected to be around 4.3%, a decline from the previous quarter due to factors such as a slowdown in industrial production and construction [5][15] - Industrial production growth is expected to be 5.2% year-on-year in Q4, down from 5.8% in Q3, with December's growth at 6.0% [5][15] - The construction sector is anticipated to see a further decline in GDP growth, with projections of -3% in Q4 compared to -2.3% in Q3 [5][15] Prices - CPI is expected to rise by 0.1% month-on-month in December, with a year-on-year increase from 0.7% to around 0.8% [6][16] - PPI is projected to show a month-on-month increase of 0.1%, with a year-on-year improvement from -2.2% to approximately -2.0% [6][16] Production - Industrial production growth is expected to be around 6.0% in December, with a notable seasonal rebound observed in previous months [18] - Manufacturing investment growth is projected to decline to 1.3%, while real estate investment is expected to drop by 16.8% [7][22] External Trade - December exports are expected to grow by around 3.5% year-on-year, while imports are projected to increase by 1% [19][21] - The strong external demand is expected to support export growth despite a high base effect [19][20] Fixed Asset Investment - Fixed asset investment growth is anticipated to decline to around -3.3% for the year, with significant drops in real estate and infrastructure investments [22][23] - New infrastructure projects worth over 400 billion yuan are expected to be approved, which may stabilize investment in early 2026 [22] Real Estate Sales - Real estate sales are projected to decline by around 15% in December, with a cumulative decrease of 8.6% for the year [24][23] Retail Sales - Retail sales growth is expected to be around 1.0% in December, with essential consumption showing a growth rate of 3.5% [26] - The automotive sector is anticipated to continue its decline, impacting overall retail performance [26] Financial Sector - New social financing is expected to reach 2.3 trillion yuan in December, a decrease of 470 billion yuan compared to the previous year [27] - M2 growth is projected to be around 7.9%, while M1 is expected to see a slight increase due to seasonal factors [28]

Core Viewpoint - The article discusses the recent implementation of the "Two New" subsidy policies aimed at boosting consumption and investment, highlighting changes in subsidy amounts and categories for various consumer goods and infrastructure projects [2][9]. Consumption Subsidies - The National Development and Reform Commission (NDRC) and the Ministry of Finance have allocated 62.5 billion yuan for the first batch of subsidies for consumer goods recycling in 2026, with a total of 81 billion yuan planned for the year [2]. - The subsidy for home appliances has been refined to focus on six categories: refrigerators, washing machines, televisions, air conditioners, computers, and water heaters, with a subsidy of 15% of the product price and a cap of 1,500 yuan per item [2]. - The scope of digital product subsidies has been expanded to include smartphones, tablets, smartwatches, smart glasses, and smart home products, including those designed for elderly care [2]. Automotive Subsidies - The subsidy structure for automobiles has shifted from fixed amounts to percentage-based reimbursements. For new energy vehicles, a subsidy of 12% of the sales price is provided, with a maximum of 20,000 yuan, while for fuel vehicles, it is 10% with a cap of 15,000 yuan [3]. - The subsidy for vehicle replacement has also been adjusted, with new energy vehicles receiving 8% of the sales price (up to 15,000 yuan) and fuel vehicles receiving 6% (up to 13,000 yuan) [3]. Investment Initiatives - The NDRC has announced an early release of the "Two Heavy" construction project list and central budget investment plans totaling approximately 295 billion yuan, aimed at accelerating the disbursement and utilization of funds [3][11]. - Major infrastructure projects have been approved, with total investments exceeding 400 billion yuan, including transportation, water resource allocation, and energy facilities [3][11].

Core Viewpoint - The CFETS RMB Exchange Rate Index will adjust the currency basket weights based on trade shares, effective from January 1, 2026, reflecting changes in trade data from 2024 [1]. Group 1: What is the CFETS Index? - The CFETS RMB Exchange Rate Index is a nominal basket currency index calculated using geometric averaging based on the RMB's middle price against a basket of currencies, weighted by trade shares [3][12]. Group 2: How are the basket weights adjusted? - The currency weights are adjusted annually based on trade shares from two years prior, with the new weights applying to the following year [4][13]. Group 3: Changes in the 2026 New Weights - The new weights for 2026 align closely with the 2024 trade shares, with notable discrepancies for the USD and EUR being higher than their respective trade shares, while the HKD is significantly lower [5][14]. - The concentration of the top five currencies has declined for four consecutive years, with their combined weight dropping to 58.15% in 2026, averaging a decline of approximately 1.31 percentage points per year [6][20]. - The weight of developed market currencies has decreased from 76.97% in 2020 to 69.56% in 2026, while emerging market currencies have increased from 23.03% to 30.44% [7][22]. - The weight of the USD has decreased from 19.88% in 2022 to 18.31% in 2026, with an average annual reduction of about 0.51 percentage points [8][24]. - Among emerging market currencies, those from ASEAN, the Middle East, and Russia have the highest weights, collectively accounting for 19.29% of the emerging market currency weight in 2026 [8][30]. Group 4: Trade Share Changes in 2025 - The trade shares from 2025 will guide the adjustments for the currency basket weights in 2027, indicating a potential continuation of the decline in the concentration of the top five currencies [9][34]. - The share of developed market trade is expected to decline further, while emerging market trade shares are anticipated to rise [9][36]. - The significant drop in the US trade share suggests a further decrease in the weight of the USD [9][39]. - Trade shares for ASEAN and Middle Eastern currencies are expected to rise, while the share for Russian trade may decline [9][40]. Group 5: Impact of New Weights on RMB Exchange Rate - The internal and external linkage analysis framework indicates that the new weights will affect the RMB exchange rate dynamics [9][42]. - The influence coefficient of the USD index on the USDCNY middle price has decreased from 0.337 to 0.331, indicating reduced depreciation pressure on the RMB against the USD [9][45]. - Under the new weights, a 5% increase in the USD index could lead to a passive depreciation of the RMB against the USD by approximately 1.66% [9][50].