Core Insights - In the fourth week of January, there are positive signs in terminal demand with market activity recovering, second-hand housing sales performing well, and an increase in theme park visitor numbers. However, automotive sales remain low year-on-year, and service consumption shows divergence with a lackluster film box office performance [2] Real Estate - In the first four weeks of January, new home sales in 42 cities saw a narrowing decline, improving from -25.6% to -22.5% year-on-year, while second-hand home sales in 19 cities turned positive at 13.1% from -27.7% [4] - The average sales volume of new homes in 42 cities improved to a decline of -19.5% from -34.9% the previous week, and second-hand home sales in 19 cities increased to 44.4% from -6.9% [4] Automotive - In the first 18 days of January, retail and wholesale sales of passenger cars saw an expanded year-on-year decline, with retail sales down by 28% and wholesale sales down by 35% [6] - The production of semi-steel tires increased to 74.6%, indicating potential strength in wholesale orders despite weak retail performance [8] Textile and Apparel - In December, the textile and apparel sub-industry experienced a decline in export growth, with textile yarn exports down by 4.2% year-on-year and clothing exports down by 10.2% [12] Agricultural Products - The agricultural product wholesale price index increased this week, with pork prices rising by 2.4% and egg prices by 6.3% [16] Film Industry - The film box office revenue and audience numbers both declined, with box office revenue around 280 million yuan, reflecting a year-on-year drop of 23.1% [20] Leisure and Entertainment - Theme park visitor numbers increased slightly, with Shanghai Disneyland seeing a rise to 54,000 visitors, although still down by 10.8% year-on-year [23] Employment - The national employment volume index decreased to 1.6, while the employment price index rose to 22.8, indicating a higher employment volume compared to last year but lower prices [28] Chemical Industry - The PTA industry chain saw most product prices rise, while the operating rates generally declined due to maintenance and reduced demand from downstream textile enterprises [33] Steel Industry - Steel prices and profit margins decreased, but steel production growth turned positive at 0.3%, indicating a recovery in output despite seasonal demand weakness [37] Cement Industry - National cement prices continued to decline, with a decrease in the cement enterprise capacity ratio, indicating a slowdown in production [43] Glass Industry - The average price of float glass increased slightly, but inventory levels rose, suggesting limited demand support [48] Oil Industry - Oil prices showed mixed trends, with Brent crude down and WTI crude up, influenced by geopolitical uncertainties and seasonal refinery demand [52] Non-ferrous Metals - Prices for major non-ferrous metals rose, with copper and aluminum inventories increasing, reflecting market dynamics influenced by geopolitical factors [57] Coal Industry - Thermal coal prices fell due to reduced demand from warmer weather, while coking coal prices increased, indicating mixed trends in the coal market [62] Freight Transport - In the first 18 days of January, sea freight growth increased while land transport growth declined, reflecting changes in shipping demand [64] Passenger Transport - Domestic flight operations increased, while subway passenger volumes in 20 cities showed slight declines, indicating a recovery in long-distance travel [69] Power Industry - The average daily coal consumption of major power generation groups turned positive at 6.7% year-on-year, driven by increased heating demand [73]

Key Points - The fiscal policy in 2025 remains strong, but the effectiveness of fiscal expansion in driving economic growth has decreased, reflecting a lower "cost-effectiveness" of fiscal measures due to structural transformation, slow spending of special government bonds, and low price levels impacting fiscal efficiency [2][6][13] Group 1: Fiscal Strength and Effectiveness - The fiscal policy maintains a strong expansionary stance, with total fiscal expenditure as a percentage of GDP showing a recovery in 2025 after a decline from Q3 2022 to the end of 2024 [5][6] - The fiscal multiplier effect has weakened, with the fiscal effect coefficient dropping below 1, indicating that fiscal spending is less effective in driving GDP growth compared to 2024 [6][10] - Structural transformation has led to a shift in fiscal spending towards areas with higher capital retention and longer effectiveness cycles, reducing the expected impact on traditional infrastructure [7][10] Group 2: Changes in Policy Focus - The 2026 fiscal policy aims to maintain a stable budget deficit rate while expanding fiscal spending, with a focus on domestic demand, technological innovation, and strengthening social welfare [15][18] - The emphasis on domestic demand has shifted to a strategic priority of "domestic demand-led" growth, highlighting the importance of increasing residents' income [18][20] - The standardization of tools and policies is aimed at enhancing efficiency, with a focus on preventing local subsidy competition and creating a unified national market [20][21] Group 3: Government Debt and Financing - The issuance of government bonds in Q1 2026 is expected to remain stable compared to the previous year, with a slight increase in net financing scale [24][26] - Local government debt issuance is primarily focused on special refinancing bonds, with a more uniform pace of debt issuance anticipated in 2026 compared to 2025 [26] - The overall growth rate of government debt in Q1 2026 is expected to be lower than in the same period in 2025, indicating a more moderate approach to fiscal expansion [26]

Economic Overview - The national economy achieved a GDP growth of 5% for the year, successfully meeting the target [2][11] - Exports continued to support growth, benefiting from reduced trade disruptions post the China-US Kuala Lumpur Agreement, with strong growth in the electronic and high-tech product sectors [2] - Investment saw a further decline, with all three major investment categories experiencing downward trends, particularly in manufacturing and real estate [2][4] Industrial Production - Industrial production showed signs of recovery, with the industrial added value for December increasing by 5.2% year-on-year [3] - The mining, manufacturing, and electricity sectors reported growth rates of 5.4%, 5.7%, and 0.8% respectively [3] - Exports contributed positively to industrial production, with a year-on-year increase in export delivery value of 3.2% [3] Investment Trends - Fixed asset investment saw a year-on-year decline of 15.1%, with private investment dropping by 17.2% [4] - Real estate investment experienced a significant decline of 35.8%, while manufacturing investment fell by 10.5% [4] - Infrastructure investment also faced challenges, with traditional and new standards showing declines of 15.9% and 12.2% respectively [4] Consumer Behavior - Retail sales growth slowed to 0.9% in December, marking a new low since 2023, influenced by the real estate cycle and consumer debt [7] - Service consumption showed resilience, with a year-on-year growth rate of 5.5%, supported by policy initiatives [7] - Essential consumer goods saw a decline in growth, while discretionary goods showed a narrowing decline [7] Real Estate Market - Real estate sales area saw a year-on-year decline of 15.6%, although the rate of decline improved compared to November [8] - New construction area decreased by 19.4%, while the completion area also faced a decline [8] - Housing prices continued to drop across various city tiers, with both new and second-hand residential prices decreasing [8] Employment and Economic Stability - The urban unemployment rate remained stable at 5.1%, consistent with previous months [11] - Overall, the economy is facing challenges from external uncertainties and ongoing structural adjustments, with a focus on expanding consumption as a key growth strategy for 2026 [11]

Key Points - The midterm elections will determine the distribution of seats between the two parties in Congress, impacting Trump's policy implementation during the latter half of his term [2][6] - Approximately one-third of Senate seats will be up for election, while all House seats will be contested [7][9] - The House of Representatives is currently controlled by the Republican Party, which holds a slim majority, while the Senate has a more solid Republican presence [9][22] Election Highlights - Key dates include "Super Tuesday" on March 3, where early primaries will take place in North Carolina and Texas, potentially reflecting party dynamics and voter sentiment [3][11] - June will see a peak in primaries with 16 states holding elections, including critical battlegrounds like California and New Jersey [11] Influencing Factors - Redistricting is a significant factor, as both parties are actively working to redraw district boundaries to enhance their chances of winning seats [4][16] - Voter satisfaction, particularly regarding inflation and economic issues, is crucial, with Trump's approval rating dropping from 50% to 43% over the past year [19][21] Potential Outcomes - Historically, the party of the sitting president tends to lose seats in the House during midterm elections, with only 4 out of 31 instances since 1902 where the ruling party maintained its position [22] - If the Democrats regain control of the House, it could significantly impact fiscal legislation, as only the House can initiate tax and revenue-related bills [23]

Monetary Policy Insights - The central bank has announced an increase in structural monetary policy tools while indicating that there is still room for both reserve requirement ratio (RRR) cuts and interest rate reductions, maintaining a cautious approach towards broad monetary easing [2] - Structural interest rate cuts are aimed at reducing costs for banks and creating conditions for future policy rate reductions, with a potential RRR cut expected in the first quarter [2][3] Financial Data Overview - In December, the year-on-year growth of M1 continued to decline, while M2 growth rebounded, primarily due to increased fiscal spending at year-end and a shift of government deposits to residents and enterprises [2][9] - Social financing in December showed a decrease of 646.2 billion yuan year-on-year, with government bonds being the main drag on this decline [6] Loan Dynamics - December saw a total of 9.1 trillion yuan in new RMB loans, with improvements mainly from the corporate sector, while the residential sector continued to show weakness with a reduction of 916 billion yuan in loans [8] - The corporate sector's loans increased by 1.1 trillion yuan, with short-term loans rising by 370 billion yuan and medium to long-term loans increasing by 330 billion yuan [8] Structural Policy Adjustments - The central bank has implemented a series of structural monetary policy adjustments, including a 0.25% reduction in various structural monetary policy tool rates and an increase in specific loan quotas for agriculture, small enterprises, and technological innovation [3] - A new 1 trillion yuan loan quota has been established for private enterprises, along with expanded support for carbon reduction and service consumption [3] Deposit Trends - In December, M2 year-on-year growth rebounded to 8.5%, with a notable increase in household deposits by 2.6 trillion yuan, while corporate deposits saw a rise of 1.2 trillion yuan [9] - The gap between M2 and M1 growth rates widened to 4.7%, indicating a decrease in the liquidity of funds [9]

Core Viewpoint - China's export growth recorded a year-on-year increase of 6.6% in December, driven by strong performance in the electronics and high-tech sectors, while imports also saw significant growth, particularly in energy and electronic products [2][4][12]. Export Performance - December's export growth of 6.6% represents a 0.7 percentage point increase from November, with the growth rate exceeding the median of the past five years, indicating increased export momentum [2][4]. - The electronics sector saw a notable increase in export growth, rising by 13.6 percentage points to 15.9%, contributing 2.8 percentage points to overall export growth [4]. - High-tech product exports also increased, with a year-on-year growth of 16.9%, contributing 4.0 percentage points to overall export growth [4]. - Exports to neighboring regions surged, particularly to Hong Kong (31.5%) and ASEAN (11.3%), while exports to the US (-30.2%) and the EU (11.5%) declined [6]. Import Performance - Imports grew by 5.7% year-on-year in December, a significant increase of 3.8 percentage points from the previous month, driven by higher imports of energy and electronic products [12][14]. - Notably, imports from the EU increased by 17.9%, while imports from the US decreased by 28.6% [12]. - The import growth was supported by both volume and price increases across various categories, with energy and electronic products showing substantial improvement [14]. Trade Balance - China's trade surplus expanded slightly to $114.14 billion in December, with net exports continuing to support the economy [17]. - The outlook for exports in early 2026 remains positive, with expectations of sustained resilience despite potential declines in growth rates due to external factors [19].

Core CPI and Inflation Trends - The core CPI remained flat at 2.7% year-on-year in December, aligning with expectations; the core CPI was at 2.6%, below the expected 2.7%, marking the lowest level since April 2021 [2] - Month-on-month, the CPI increased by 0.2%, also below the expected 0.3%; energy inflation continued to decline, offsetting the rebound in food prices, with core goods and services remaining low [2] Energy Inflation - In December, the year-on-year growth rate of energy CPI dropped to 2.3%, down 1.9 percentage points from the previous month; gasoline prices fell to -4.3% year-on-year, while electricity prices remained high at 6.7% [5] - The average price of Brent crude oil in December was $62.94 per barrel, down from $63.87, indicating a steady decline towards $60 due to oversupply in the oil market [5] - EIA data suggests a global oil market surplus of 2.24 million barrels per day in 2025, increasing to 2.26 million barrels per day in 2026, indicating continued pressure on oil prices [5] Automotive Inflation - Core goods year-on-year growth was recorded at 1.4%, unchanged from the previous month; new and used car prices continued to decline to 0.3% and 1.6% respectively [6] - Leading indicators suggest a potential marginal recovery in automotive inflation by Q1 2026, indicating possible improvements in durable goods consumption post Fed rate cuts in late 2025 [6] Service Inflation - Core services year-on-year growth remained flat at 3%, with housing holding steady at 3.4% and a month-on-month increase of 0.3%; high mortgage rates continue to suppress housing inflation [8] - Medical services saw a rebound of 0.2 percentage points to 3.5%, countering the decline in transportation services, which have been affected by falling oil prices [8] Long-term Inflation Expectations - In January 2026, the one-year inflation expectation from Michigan consumers remained at 4.2%, while the five-year expectation increased to 3.4% from 3.2%, indicating ongoing consumer concerns about inflation risks [10] Interest Rate Expectations - Following the inflation data release, the dollar index fluctuated, and U.S. stock indices experienced slight declines; the two-year Treasury yield decreased by about 1 basis point to 3.53% [12] - Market expectations for a Fed rate cut in June increased to 70% from 68%, with the likelihood of a rate cut in January dropping to 2.8% [12] - Overall, the continued low inflation in December suggests further potential for Fed rate cuts in the future [12]

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Group 1 - The core viewpoint of the article highlights a continued slowdown in non-farm employment growth, with December's addition dropping to 50,000, below the expected 65,000, and a downward revision of 76,000 for October and November combined [2] - The private sector added 37,000 jobs in December, with an average of 43,000 jobs added in November and December, indicating a persistent trend of slowing job growth [2] - The leisure and hospitality sectors contributed significantly to job growth, adding 47,000 and 41,000 jobs respectively, while manufacturing continued to show negative job growth, indicating weak demand in the sector [5] Group 2 - The unemployment rate unexpectedly fell by 0.1 percentage points to 4.4%, with the labor force participation rate decreasing to 62.4%, suggesting a complex labor market dynamic [6] - The number of job vacancies in November dropped to 7.146 million, the lowest since 2021, indicating a growing mismatch between labor supply and demand [8] - Average hourly earnings in December increased by 0.3% month-on-month, with a year-on-year growth of 3.8%, reflecting resilience in wage growth despite broader economic challenges [9][12] Group 3 - The market's expectation for a Federal Reserve interest rate cut in January decreased significantly from 14% to 5%, indicating a shift in market sentiment following the release of the non-farm data [17] - The overall labor market conditions suggest an increasing supply-demand imbalance, which may continue to exert pressure on the employment market moving forward [17]

Core Viewpoint - The article emphasizes the importance of macroeconomic research in optimizing portfolio structures and managing risks in a highly uncertain macro environment, highlighting the strategic value of the macro team in connecting various research outputs and providing a multi-dimensional analysis framework [1]. Group 1: Macro Research Team - The macro team is described as the "central nervous system" of the research institute, crucial for calibrating industry research's policy sensitivity and providing underlying logic for asset allocation [1]. - The new addition of Dr. Chen Xing, with over ten years of macro research experience, aims to build three major research matrices: domestic real economy, financial liquidity and asset allocation, and overseas economy [1]. Group 2: Research Philosophy - The article advocates for a research philosophy of "大道至简" (simplicity in complexity), encouraging clear and actionable conclusions rather than overly complex analyses [5][6]. - It stresses the importance of making research accessible to a broad audience, avoiding technical jargon and focusing on straightforward communication of complex ideas [5]. Group 3: Historical Context and Future Aspirations - The article reflects on the author's past experiences and the influence of mentors in shaping research approaches, emphasizing the need to learn from historical insights while looking forward [6]. - There is a commitment to delivering more insightful research outcomes in the future, with an appeal for continued support from clients and stakeholders [6].