28 January 2026 China Macro Tracker Economics A more conservative approach to the GDP target China Erin Xin Economist, Greater China The Hongkong and Shanghai Banking Corporation Limited erin.y.xin@hsbc.com.hk +852 2996 6975 Lulu Jiang (Reg. No. S1700523070001) GDP: Local GDP targets starting to be announced, with many lower than last year The national GDP growth target will not be unveiled until the Two Sessions held starting 4 and 5 March, but recent developments suggest Beijing may take a more conservati ...

Summary of Key Points from the Conference Call Industry Overview - The focus is on the **Chinese economy**, particularly regarding the **property sector** and **services** industry, which are experiencing renewed pressure and signs of weakness [2][4]. Core Insights and Arguments - **Economic Growth Projections**: Despite a slowdown since Q3, China is expected to achieve a growth rate of **4.9% in 2025**, aligning with the target of "around 5%" for the current year [2]. - **Fiscal Policy Support**: Anticipation of continued fiscal support through special bonds, with the Minister of Finance indicating potential for stronger fiscal measures next year. A total of **RMB7 trillion** in project investments is expected, driven by new policy tools to assist local governments [3]. - **Monetary Policy Stance**: The monetary policy is expected to remain "moderately loose," with ongoing liquidity support through various measures, including RRR cuts and treasury purchases. Interest rate cuts are now anticipated in **2026** instead of this year [3]. - **Industrial Profit Decline**: Industrial profits fell by **5.5% year-on-year in October**, attributed to a higher base and rising financial costs, indicating squeezed profit margins in certain sectors due to oversupply and price competition [4]. - **Anti-involution Campaign**: The campaign aimed at addressing unfair pricing and promoting high-quality development is gaining momentum, although real indicators like pricing improvements have shown limited progress [5][7]. - **Battery Industry Regulation**: The Ministry of Industry and Information Technology (MIIT) is pushing for faster policy support in the battery sector, where capacity utilization was below **50% in 2024**, and prices have dropped by **80% over three years** [8]. - **Demand-Side Stimulus**: A plan to boost consumption has been released, targeting the creation of a **three trillion-yuan** consumer sector by **2027** and emphasizing both supply and demand-side measures [12]. Additional Important Insights - **Sector-Specific Developments**: The nonferrous metals industry saw a **14% year-on-year profit increase in October**, suggesting some sectors are responding positively to regulatory measures [9]. - **Consumption Trends**: The drop in services activity highlights the need for more consumption stimulus, with a focus on expanding services consumption and potential subsidy programs [12]. - **Real Estate Market**: New home sales in Tier-1 cities have shown seasonal increases, while overall new home sales remain below historical levels [40][46]. - **Logistics and Travel**: Metro volumes in large cities remain elevated, and cross-city travel is above historical levels, indicating a recovery in mobility [52][54]. This summary encapsulates the key points discussed in the conference call, providing insights into the current state and future outlook of the Chinese economy and specific industries.

19 November 2025 China Macro Tracker Economics Not yet at the finishing line Policy support: Slowing activity should prompt further policy support China's economic activity slowed in October, with investment, consumption, and industrial production softening due to subdued external demand and weaker domestic momentum (see China activity, 14 November). This should prompt a strong policy response on both the fiscal and monetary fronts to meet this year's growth targets and ensure a strong start for the 15th Fi ...

22 September 2025 Asian FX Focus: RMB Currencies At a critical level The USD-CNY fixing fell quite steadily after the 12 May trade truce but has stalled at 7.10-7.11 since late August. We can think of a few inter-related reasons. These factors together mean that another leg lower in the USD-CNY fixing could require a fresh catalyst, such as: the DXY index sees downward momentum again, concrete progress is made on US-China tariff issues, there are material USD sales by exporters and net capital inflows to ma ...

Summary of Key Points from the Conference Call Industry Overview - **Real Estate Sector**: Shenzhen has joined Beijing and Shanghai in easing home-buying restrictions, lifting purchase limits in six districts for both local families and non-residents who have paid social security or income tax for at least one year [2][7]. - **Government Support**: The Chinese government is considering mobilizing central SOEs to purchase unsold homes from troubled developers, utilizing a RMB300 billion fund to stabilize the real estate sector [3]. Core Insights - **Easing Measures Impact**: The recent easing measures in Shenzhen may provide marginal support to the real estate market, which has seen primary home sales in tier-1 cities fall below last year's levels. Local realtors reported a 10% increase in property viewings since the announcement [2][3]. - **Long-term Growth Focus**: The Ministry of Industry and Information Technology (MIIT) is prioritizing long-term high-quality growth, particularly in the electronic information manufacturing sector, with a target growth rate of 7% for 2025 and 2026 [4][8]. - **Anti-involution Measures**: MIIT has introduced an "anti-involution" plan aimed at reducing irrational competition and enhancing supply capacity in key sectors, with further plans for nine additional sectors [4][7][9]. Additional Important Information - **Sports Consumption Boost**: The State Council has issued 20 measures to promote sports consumption, aiming to expand the sports industry's total scale to over RMB7 trillion by 2030, up from RMB3.7 trillion in 2023 [11][12]. - **Service Consumption Policies**: The Ministry of Commerce plans to introduce policies to enhance service consumption, focusing on high-quality service supply and attracting foreign direct investment [13]. - **Economic Activity Indicators**: Various economic indicators show mixed results, with car sales in August increasing compared to last year, while national box office revenues and second-hand home sales in major cities have eased [30][40]. Conclusion The conference call highlighted significant developments in the real estate sector, government initiatives to support long-term growth, and measures to boost consumption in various industries. The focus on easing restrictions and promoting high-quality growth reflects a strategic shift in response to current economic challenges.

Summary of Key Points from the Conference Call Industry Overview - **Industry**: Chinese Economy and Macro Environment - **Key Focus**: Economic growth, monetary policy, property sector stabilization, and demand-side measures Core Insights and Arguments 1. **Slower Growth and Demand-Side Measures**: July economic data indicated a slowdown in growth momentum, with a month-on-month contraction in new bank lending and weaker investment and retail sales. This may lead to a faster rollout of demand-side measures to support growth in H2 [2][7] 2. **Policy Support for Private Economy**: President Xi emphasized the need for measures to promote the private economy, including fair competition and settling local government arrears. Special local government bonds (SLGBs) are being used to accelerate repayments to private firms [3][7] 3. **Property Sector Stabilization**: The central government may take a more active role in stabilizing the property sector, with reports suggesting that state-owned enterprises (SOEs) may be asked to purchase unsold homes to clear excess inventories [4][8] 4. **Monetary Policy Stance**: The People's Bank of China (PBoC) maintained a moderately accommodative monetary policy, focusing on structural support for the real economy. There is an expectation of further monetary easing, including interest rate cuts and liquidity support [9][11] 5. **Targeted Support for Real Economy**: The PBoC's report highlighted the need for targeted support in areas such as technology, green development, and inclusive finance, which now account for approximately 70% of new loans [10][11] 6. **Weakness in Property Data**: July property data showed significant declines, with property investment falling at the fastest pace since November 2022. This has prompted calls for solid measures to stabilize the sector [8][9] 7. **Consumer Confidence and Spending**: Structural measures aimed at improving household and corporate confidence are crucial for reviving consumer spending and corporate investment [2][3] Additional Important Insights 1. **Debt Swap Programs**: The ongoing debt swap programs are expected to help replenish cash flows for private firms, enhancing their confidence in the market [3][7] 2. **High Frequency Data**: Primary home sales in 30 large cities fell approximately 15% year-on-year in August, indicating continued weakness in the property market [8][9] 3. **Interbank Rate Trends**: Interbank rates have edged down, reflecting the PBoC's efforts to maintain liquidity in the financial system [12][11] 4. **Container Shipping Costs**: Container shipping costs on China-Eastern US routes have declined further, impacting trade dynamics [70][11] This summary encapsulates the critical points discussed in the conference call, focusing on the economic landscape, policy measures, and sector-specific insights that could influence investment decisions.

Core Viewpoint - Lufax Holding Ltd announced the resignation of Mr. Weidong Li as an independent non-executive Director and the appointment of Ms. Wai Ping Tina Lee to the same position, effective August 14, 2025, reflecting changes in personal work commitments and the company's ongoing governance adjustments [1][2]. Group 1: Management Changes - Mr. Weidong Li resigned from his roles as an independent non-executive Director, member of the Audit Committee, and chairman of the Nomination and Remuneration Committee due to personal work arrangements [1]. - Ms. Wai Ping Tina Lee has been appointed as an independent non-executive Director and a member of both the Audit Committee and the Nomination and Remuneration Committee, effective August 14, 2025 [2][4]. - Mr. David Xianglin Li also resigned as a member of the Nomination and Remuneration Committee, leading to the appointment of Mr. Dicky Peter Yip as the new chairman of that committee [4]. Group 2: Profile of New Director - Ms. Wai Ping Tina Lee, aged 63, has over 40 years of experience in legal and banking sectors, previously holding senior legal positions at The Hongkong and Shanghai Banking Corporation Limited from 2001 to 2023 [3]. - Her career includes roles such as Senior Legal Counsel and Regional Head of Legal for Commercial Banking in Asia Pacific, showcasing her extensive expertise in financial services [3]. - Ms. Lee's educational background includes a Professional Diploma in Business Studies (Banking) and legal qualifications from Hong Kong University SPACE and Manchester Metropolitan University [3]. Group 3: Company Overview - Lufax is recognized as a leading financial services enabler for small business owners in China, offering financing products tailored to their needs [5]. - The company has established partnerships with 85 financial institutions in China, many of which have collaborated with Lufax for over three years [5].

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - Domestic consumption in China is showing signs of improvement, particularly driven by extended sales periods and trade-in programs during shopping festivals [5][10] - The ongoing tensions in the Middle East have led to fluctuations in oil prices, with expectations for Brent crude to stabilize around USD65 per barrel by Q4 2025 if de-escalation occurs [2][4] - The impact of oil price shocks is expected to have a mixed effect on different sectors, with a potential drag on real GDP growth and increases in CPI and PPI [4] Summary by Sections Oil Market - Approximately 18% of China's energy consumption is derived from crude oil, with about 70% of this being imported [3] - The Strait of Hormuz is crucial for China's oil imports, accounting for over 40% of its crude oil shipments [3] - A 10% increase in Brent crude oil prices could reduce real GDP growth by approximately 0.1 percentage points while increasing headline CPI and PPI by around 0.3 and 1.3 percentage points respectively over a year [4] Consumption Trends - The "618" shopping festival in 2025 saw a 15% year-on-year growth in gross merchandise value (GMV), a significant recovery from a 7% decline in 2024 [5] - Trade-in programs contributed approximately RMB380 billion in sales, representing 9% of monthly retail sales in May [5][10] - Service consumption is expected to grow, with events like the Jiangsu Urban Football League driving increased spending in culture and tourism [11] Fiscal Policy and Support - Fiscal spending has focused on improving livelihoods, with social security and education spending rising by 9.2% and 6.7% year-on-year respectively in the first five months of 2025 [13] - The government plans to allocate additional subsidies for trade-in programs, with a total of RMB138 billion earmarked for localities in the coming months [10] - The Lujiazui Forum highlighted China's commitment to financial reforms, including RMB internationalization and technological innovation [15] Real Estate and Land Sales - The property sector remains weak, with property investment down 12% year-on-year in May, affecting land sales revenue which decreased by 11.9% in the first five months [14][47] - New home sales in Tier-1 cities have also seen a year-on-year decline, indicating ongoing challenges in the real estate market [42][52] Economic Activity Indicators - Various economic indicators such as the operating rates in the steel and chemical sectors have shown stability, while coal consumption in major provinces has increased seasonally [16][25][26] - National box office revenues rose by 12%, reflecting a recovery in entertainment consumption [32]

Investment Rating - The report indicates a strong year-to-date return performance for emerging markets (EM) local debt, suggesting a favorable investment outlook despite recent geopolitical risks and rising oil prices [9]. Core Insights - Foreign demand for Korea government debt remains robust, with inflows of USD8.2 billion in May 2025, following USD7.9 billion in April [13]. - Emerging markets are experiencing a shift in foreign investment patterns, with stronger inflows into low yielders like Korea, contrasting with outflows from high yielders [9][10]. - Mexico government debt has seen significant outflows, totaling approximately USD4 billion in 2Q25, indicating a decline in foreign interest [11][12]. Summary by Sections Foreign Capital Flows - Inflows into Korea government debt reached USD8.2 billion in May, with notable investments in Korea Treasury Bonds (KTBs) [13]. - Malaysia government debt attracted USD3 billion in inflows in May, up from USD2.3 billion in April, indicating strong foreign interest [14]. - Colombia government debt saw an increase of USD436 million in foreign holdings in May, contrasting with previous months [15]. Emerging Markets Trends - The report highlights a strong performance of EM local debt, with a focus on positioning for lower rates in low yielders [9]. - Foreign investors increased their holdings in Indonesia and Hungary, while outflows were noted from India, Thailand, and South Africa [10]. - The report emphasizes the importance of geopolitical stability and economic indicators in shaping future investment flows into EM sovereign debt [9].

Investment Rating - The report does not explicitly provide an investment rating for the industry. Core Insights - The success of China-US trade talks is focused on stabilizing the truce, with potential for reduced export controls, but significant breakthroughs on trade issues may take time [3] - China has announced new guidelines to support people's livelihoods, emphasizing social welfare coverage and targeted support for low-income groups, youth, and gig workers [8][9] - The People's Bank of China (PBoC) injected RMB1 trillion into the banking system to address liquidity needs, indicating a proactive approach to economic stability [13] Summary by Sections Trade Relations - Recent China-US trade tensions have led to high-level talks aimed at addressing export controls, with both sides showing willingness to negotiate [2][3] - China's exports to the US have seen a decline, but high-frequency data indicates a rebound in container exports, suggesting recovery from tariff impacts [4][62] Domestic Policies - China released 10-point guidelines to improve social welfare, including childcare subsidies and minimum wage increases, aimed at enhancing living standards [9][11] - The government plans to allocate RMB158.7 billion in fiscal support for low-income households, indicating a commitment to social safety nets [12] Economic Activity - The operating rates in various sectors, such as semi-steel tyres and chemicals, show mixed trends, with some sectors experiencing a decline while others see growth [14][16] - National box office revenues and postal delivery volumes have shown fluctuations, reflecting broader economic activity [32][30] Financial Measures - The PBoC's liquidity injection is a response to a maturity wall of interbank NCDs and ongoing government bond issuance, highlighting the need for immediate liquidity support [13] - Interbank rates have remained low, indicating a stable financial environment [29] Housing Market - New home sales in Tier-1 cities have started to rebound, while second-hand home sales in major cities have also seen an uptick, suggesting a recovery in the housing market [43][45] - Land sales remain below historical levels, indicating cautious market sentiment [47] Consumer Behavior - The report highlights the need for improved business confidence to stabilize employment, particularly for the youth entering the job market [12] - Consumer spending patterns are influenced by government policies aimed at boosting disposable incomes and consumption [10]