摩根大通：中国 - 反内卷 = 长期博弈，三方面原因说明供应约束的规模和持续时间可能带来积极惊喜-JPM _ CHINA - Anti-Involution = The long game. 3x reasons magnitude & duration of supply-discipline could positively surprise

Investment Rating - The report indicates a positive outlook for the Chinese market, with MSCI China showing an increase of 8% in USD over the past month, outperforming MXEF's 3% increase, suggesting a favorable investment environment [2]. Core Insights - The focus of China's policy has shifted towards quality growth, limiting supply-side excesses, and enhancing consumption, which is expected to improve supply-demand dynamics and support corporate profitability [2][4]. - Investor skepticism remains regarding China's ability to maintain supply cuts, with concerns about the implications for near-term growth and employment [3][4]. - The report outlines three key reasons why China's policy pivot could yield positive surprises in both magnitude and duration, emphasizing the need for anti-involution to revive private capital expenditure and support sustainable equity upcycles [4]. Summary by Sections Private Sector Capex - The private sector in China has experienced a capex growth hiatus for the past three years, with current net profit margins at 5-6%, the lowest in Asia, necessitating supply-side cuts to rationalize competition and enhance profitability [8][9]. - Reviving private sector capex is crucial for sustainable job creation and economic growth, requiring a reduction in unnecessary output [9]. Consumption - China's high household savings rate of over 30% has underpinned growth, but there is a pressing need for households to spend more and save less, supported by a robust equity market [13][14]. - The report highlights that the MSCI China EPS CAGR from 2015 to 2024 is only 1%, significantly lower than other markets, indicating a need for EPS growth to drive long-term equity market gains [14]. Supply Side Drivers - The report notes that the initial catalysts for industrial overbuilding are diminishing, with China's supply-driven economy facing an extreme supply-demand imbalance [18][19]. - Recent developments in high-tech industries and a potential stabilization in Tier-1 city property prices could ease the growth offset needed from manufacturing [19]. Investment Themes - The report identifies several investment themes in China, including consumer leaders, equity market proxies, private innovation, and consolidation beneficiaries, suggesting a favorable risk/reward scenario in the early stages of capital discipline [24][25].