Vi e w p o i n t | 29 Jan 2026 03:00:42 ET │ 32 pages China Auto Manufacturers 2026 Outlook: 5 Positives, 5 Negatives, and 5 Stocks to Buy CITI'S TAKE We foresee 5 positives and 5 negatives for the China auto sector in 2026. Positives: 1) Surging LiDAR/ADAS/Robotaxi penetrations; 2) Export growth at 19% YoY where NEV at 49% YoY; 3) Commercial vehicles demand in sweet spot; 4) PV price-cut-norm should come to an end; 5) Gradual EV mkt shr concentration & utilization rate improvements. Negatives: 1) Cost infl ...

Core Insights - The apparel export sector showed significant growth in December 2025, primarily driven by increases in shipments to the US, EU, and UK markets, despite a decline in exports to other destinations [1][2][4] Market Performance - Exports to the US rose by 6.49% to $178.29 million compared to December 2024 [1] - Shipments to the EU increased by 6.76% to $141 million [1] - Exports to the UK saw a notable rise of 12.95% to $55.12 million [1] - Conversely, exports to other markets fell by 4.06% to $72.8 million [2] Annual Performance - Total apparel and textile exports for the full year 2025 reached $5.02 billion, marking a 5.42% increase from $4.76 billion in 2024, which translates to an increase of $258.18 million year-on-year [2] - Including fabric exports valued at $526.33 million, the total export value for the sector in 2025 was $5.51 billion [2] Growth Trends - The EU recorded the strongest annual growth in exports, increasing by 12.48% to $1.58 billion from $1.40 billion in 2024 [3] - Shipments to the US rose by 2.15% to $1.95 billion, while exports to the UK remained stable at $679.66 million, a slight increase of 0.74% [3] - Exports to other destinations grew by 4.80% to $815.78 million [3] Strategic Focus - The industry aims to sustain growth by enhancing competitiveness, ensuring delivery reliability, and building buyer confidence through consistent quality and responsible production [5] - Strengthening access to new and emerging markets is identified as a key strategy moving forward [5]

Group 1 - The core viewpoint of the article highlights the growth in consumption and exports in Henan Province, with significant increases in various sectors [1] Group 2 - In the automotive sector, consumption increased by 4.7% year-on-year [1] - The home appliance sector saw a consumption growth of 10.5% year-on-year [1] - The telecommunications equipment sector experienced a remarkable growth of 61.6% year-on-year [1] - Exports of electromechanical products grew by 22.9%, accounting for 66.1% of the province's total export value [1]

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **Chinese economy** and its export growth, alongside insights into the economic conditions in **South Korea**, **Taiwan**, **Japan**, **Australia**, **New Zealand**, **Vietnam**, **Malaysia**, **Indonesia**, **Philippines**, **Thailand**, and **India** [1][2][17][26][30]. Core Insights and Arguments 1. **China's Export Growth**: - China's export growth forecast has been upgraded due to robust export momentum, with a projected growth rate of over 5% per year, outpacing global growth [1][2]. - The manufacturing sector remains competitive, particularly in emerging sectors like batteries and electric vehicles [1]. 2. **Economic Growth Projections**: - China's GDP growth is expected to slow gradually from 5% this year to 4.5% by 2028, with a current account surplus of 3.9% of GDP in Q3 [2]. - The country is on track to achieve the largest trade surplus globally in decades, posing challenges for other manufactured goods exporters [2]. 3. **Policy and Trade Relations**: - The next Five-Year Plan emphasizes manufacturing and self-reliance, aiming to reduce imports while increasing exports [1]. - A tentative trade truce with the US has provided leverage for China, particularly regarding rare earth minerals [1]. 4. **Challenges in Domestic Demand**: - China's domestic demand is facing challenges, particularly in property and non-property investments, which have slowed significantly [12]. - The central government has less incentive to stimulate the economy aggressively in the short term due to near-target GDP growth figures [14]. 5. **Regional Economic Conditions**: - **South Korea**: Faces slow consumption growth due to demographic changes and household debt, with a need for technological advancement in exports [17]. - **Taiwan**: Exports have surged by 50% year-on-year, but investment growth remains low, indicating a narrow base of economic performance [17]. - **Japan**: Sluggish growth in Q3, with easing tariff uncertainties following a visit from US President Trump [21]. - **Australia and New Zealand**: Australia’s inflation has prompted a halt in rate cuts, while New Zealand is expected to see a growth reacceleration [22]. - **Vietnam and Malaysia**: Both countries reported strong GDP growth, driven by industrial activity and exports [26]. Other Important Insights - The report highlights the divergence in economic performance within the ASEAN region, with Vietnam and Malaysia leading in growth while Indonesia and the Philippines face challenges [26]. - The report suggests that the RMB is expected to appreciate against the USD, but this will not significantly impact China's export competitiveness [2]. - The manufacturing PMI in Taiwan and Korea indicates a narrow performance gap, with Taiwan at 47.7 and Korea at 49.4, reflecting broader economic challenges [17]. This summary encapsulates the key points from the conference call, providing a comprehensive overview of the current economic landscape in China and its regional counterparts.

Market Trends - Israel's stocks and currency are rallying after the ceasefire in Gaza [1] - Investors are betting that stability will unlock a wave of foreign capital and export growth [1]

Core Insights - Yamaha Motor Co Ltd aims for a 25% growth in exports from India this year, focusing on expanding its international market presence [1][7][6] - The Chennai factory will serve as the primary export hub, targeting advanced markets such as the US, Europe, and Japan [2][7] - The company has successfully started exporting to Europe and continues to invest in the Chennai plant to meet global standards [5][7] Export Strategy - Yamaha exports to approximately 55 countries and is actively exploring new markets to enhance its export potential [6][7] - The company reported a significant increase in exports, achieving a 33.4% growth with 295,728 units exported in 2024-25 compared to 221,736 units in 2023-24 [7] - A diverse range of models is exported from the Chennai factory, including FZ V2, FZ V3, FZ V4, Crux, Saluto, Aerox 155, Ray ZR 125 Fi Hybrid, and Fascino 125 Fi Hybrid [5][7]

Economic Indicators - South Korea's export growth slowed in October [1]

Summary of Key Points from the Conference Call on China Machinery: Construction Industry Overview - The conference focused on the machinery industry, particularly construction machinery, with insights from industry experts in market intelligence, an industry association, and an OEM [1][2]. Core Insights 1. **Divergence in Sales and Utilization**: There is a notable discrepancy between the increase in excavator sales (+16% year-over-year in July-August) and the decline in machine operating hours observed in 3Q25 [2][3]. 2. **Factors Influencing Sales**: - Increased competition among leading players has led to more inventory buyouts and sales through rental channels, particularly for small-sized machines [3]. - Local dealers are seeking export opportunities due to losses in domestic business, particularly in regions like Africa, Southeast Asia, and CIS [3][4]. 3. **Sales Growth Projection**: Excluding the effects of competition and export-driven sales, the underlying domestic recovery appears mild. However, if current trends persist, domestic sales volume growth for the year could reach +20% year-over-year, surpassing previous estimates of +15% [4]. 4. **Future Demand Trends**: Experts predict low-to-mid-teen growth for domestic excavator sales volume in 2026, with a noted decline in demand for medium-to-large-sized excavators [4][7]. Underlying Demand Trends - There has been a visible deceleration in project funding and machine operating rates in 2Q25, although this deterioration has not worsened in 3Q25. Demand for 20-50t excavators continues to decline, while the 50-70t segment has not yet recovered [4][7]. - The only segment showing positive growth is the ultra-large (70t and above) excavators, driven by demand for higher efficiency [7]. Regional Demand Variations - Traditional infrastructure and property construction demand remains weak, while mining demand has started to decline, particularly in coal mines in Xinjiang. Positive momentum is seen in rural construction, water conservancy projects, and municipal projects in select regions [7]. - State-owned enterprises (SOEs) are performing better than local governments, with regions with higher local government bond issuance seeing better machinery demand growth. West China has outperformed East China, but growth may shift towards East and Central China as conditions improve [7][8]. Export Market Insights - Africa and Southeast Asia are highlighted as key growth regions for excavator exports, with strong demand driven by construction and mining projects. The rising presence of Chinese contractors in these markets is contributing to the preference for Chinese machinery [9]. - However, growth in previously high-performing export destinations like the CIS region, Saudi Arabia, and Brazil has moderated this year [9]. - Experts anticipate that growth in Africa and Central Asia may taper off into 2H26, potentially leading to a downcycle lasting 1-2 years, but still expect overall volume growth of over 10% per annum for China's excavator exports in the coming years [9]. Conclusion - The machinery industry is experiencing mixed signals with robust sales figures contrasted by declining operating hours. The competitive landscape and export opportunities are influencing domestic sales, while regional demand varies significantly. Future growth will depend on several factors, including project funding and the performance of different market segments.

Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the **China Economics** sector, particularly regarding **trade dynamics** and **export/import performance** in the Asia Pacific region. Core Insights and Arguments 1. **Export Performance**: Exports to the US have significantly declined by **-33%** year-over-year in August, compared to **-22%** in July, indicating a worsening trend due to US tariffs. However, exports to the rest of the world (RoW) showed resilience with an **11.2%** year-over-year growth in August, attributed to a competitive supply chain and a depreciating trade-weighted RMB against a weaker dollar [2][9]. 2. **Import Trends**: Imports have shown a modest growth of **1.3%** year-over-year, which is lower than the **4.1%** growth in July. This reflects a stabilizing yet subpar domestic demand, particularly in ordinary imports, which remain subdued due to weaker commodity imports [3][9]. 3. **Trade Balance**: The trade balance for August stands at **$102 billion**, with total exports at **$322 billion** and imports at **$219 billion**. Year-to-date, exports have averaged a **6.2%** growth, while imports have shown a **-0.9%** change [6]. 4. **Future Outlook**: The outlook for the second half of the year suggests that while exports may moderate due to a higher base and tariff impacts, year-over-year growth is expected to remain positive, averaging around **2%** [4]. 5. **Sector-Specific Insights**: - Mechanical and electrical products saw a **1.0%** year-over-year growth in imports, while unwrought copper and products increased by **6.4%**. Conversely, steel products and crude petroleum oil imports declined by **-6.7%** and **-15.1%**, respectively [6]. Additional Important Information - The data indicates a clear divergence in trade performance between the US and other regions, highlighting the impact of geopolitical factors on trade dynamics [2][9]. - The overall economic environment remains challenging, with expectations of continued volatility in trade due to external pressures such as tariffs and currency fluctuations [4][9]. This summary encapsulates the key points discussed in the conference call, providing insights into the current state and future expectations of the China trade landscape.

Trade Data Forecast - Institutions anticipate a decline in China's export growth rate for August [1]