Economic Growth Target - The economic growth target for 2025 is set at around 5%, consistent with the 2024 target, reflecting market expectations amid a complex external environment[6] - Achieving this target is challenging due to the unstable recovery foundation domestically and increasing external pressures[6] Consumer Price Index (CPI) - The CPI target for 2025 is adjusted to around 2%, marking the first downward adjustment in nearly a decade, from 3% in 2024[7] - This adjustment aims to enhance policy credibility and align market expectations with achievable price levels[7] Total Policy Framework - The government emphasizes a proactive approach in total policy, advocating for early and sufficient policy implementation to counter uncertainties[9] - The report includes a focus on stabilizing the real estate and stock markets, reflecting a commitment to maintaining social expectations and preventing systemic risks[10] Fiscal Policy - The fiscal policy tone shifts to "more proactive," with a total new government debt scale of 11.86 trillion yuan, resulting in a broad deficit ratio of 8.4%, up by 1.8 percentage points from 2024[11] - The deficit target for 2025 is set at 4%, breaking the implicit 3% constraint, with a significant increase in infrastructure and social spending[13] Monetary Policy - The monetary policy remains "moderately loose," with expectations for preemptive actions to address external shocks and domestic growth pressures[15] - The government plans to maintain liquidity and align monetary supply growth with economic growth and price level expectations[16] Consumption Promotion - Consumption is prioritized in the 2025 report, with initiatives to enhance consumer capacity and diversify service supply in health, elderly care, and digital sectors[19] - A special bond of 300 billion yuan is allocated to support the replacement of consumer goods, aiming to stimulate demand[20] Technological Innovation - The report emphasizes high-level self-reliance in technology, listing new focus areas such as embodied intelligence, 6G, and artificial intelligence[23] - The strategy aims to strengthen the innovation ecosystem through improved education and talent cultivation[23]

Market Style Definition - Growth style is associated with high-growth potential sectors like pharmaceuticals and technology, while value style is linked to more defensive sectors like finance[7]. - The CSI 300 Index leans towards value style with nearly one-third market capitalization in finance, whereas the CSI 1000 Index shows a diverse sector distribution with 27% in information technology, indicating a stronger growth style[8]. Style Rotation Framework - In the interest rate cycle, holding growth stocks is favorable during declining rates, while value stocks are better during rising rates due to their defensive characteristics[16]. - The term spread cycle indicates that when economic changes are more pronounced than liquidity changes, small-cap growth stocks perform better; conversely, large-cap growth stocks excel when liquidity changes dominate[18]. - In the credit spread cycle, rising credit spreads favor large-cap value stocks due to their stronger financial stability, while falling spreads benefit small-cap growth stocks by easing their financing conditions[19]. Factor Timing Backtesting - Backtesting results show that the dual interest rate strategy effectively timed the market during years when value and growth styles outperformed, particularly in 2017 and 2020 for value, and 2019 and 2021 for growth[24]. - The backtesting from December 31, 2015, to January 17, 2025, indicates that the term spread factor has a notable ability to time styles effectively[28]. Summary of Findings - The report establishes a clear distinction between the CSI 300 Index (value style) and the CSI 1000 Index (growth style) based on industry composition and growth/value factors[30]. - The constructed style rotation models based on interest rates, term spreads, and credit spreads provide insights into market behavior and investment strategies[30].