February 26, 2026 02:45 AM GMT 中国思考 | Asia Pacific 两会：科技为纲，宏观温和 GDP增速目标5%左右，但政策是托而不举。财政赤字力度预 计持平，重点仍在科技和基建，对消费和房地产的支持相对 温和。打破通缩仍在路上。 要点 GDP增速目标仍在5%左右：三⮇之二的省份已下调今年增长目标，市场猜测⬀策 层⺎能将全国目标下调至4.5–5%。我们认为这种⺎能性较低，理由如下： 然而政策依旧是托而不举：省级目标下调⹛映的是一种更ⱶⱷ实、更ⱶ注重增长 质量的态度转。ⷊ便全国增速目标维持在5%，也不会现大水漫灌的⯌激。我 们预计： • 初始政策力度与去年持平：两会或将广义财政赤字率维持在GDP的11.6%， 其中官方赤字率稳定在4%，而政府债⯉额度也和⸼年大体相近( Exhibit 2 )。 (下文续) | M | | | | | --- | --- | --- | --- | | Idea | | | | | February 26, 2026 02:45 AM GMT | 中国思考 | Morgan Stanley Asia Limited | | | | Asia Pa ...

Group 1 - By 2025, the sales volume of new energy vehicles in China is expected to exceed 50% of total new car sales, significantly surpassing the initial target of 20% set in 2020 [1] - The increase in non-fossil energy consumption is projected to rise from 16% in 2020 to over 20% by 2025, indicating a strong commitment to green energy [2] - China's forest coverage rate has exceeded 25%, making it the fastest-growing country in terms of afforestation globally [2] Group 2 - Traditional industries are transforming; for example, Taiyuan Iron and Steel Group has shifted focus to high-end stainless steel, showcasing innovation in a high-emission sector [3] - Various regions in China are leveraging their unique resources for green energy production, such as Inner Mongolia's wind power and Qinghai's solar energy, contributing to a comprehensive renewable energy industry [3] - The Ant Forest initiative has engaged millions of users in environmental actions, leading to the planting of over 600 million trees, reflecting a societal shift towards sustainable living [4] Group 3 - China's GDP is projected to exceed 140 trillion yuan in 2025, with a growth rate of 5.0%, while energy consumption per unit of added value in major energy-intensive industries has significantly decreased [4] - The shift towards green production is enhancing economic growth, demonstrating that high-quality development can be achieved without following the traditional path of pollution [4] - The ongoing green transformation is not only an environmental necessity but also a crucial aspect of future development, emphasizing the importance of sustainable practices [4]

Investment Rating - The report indicates a positive outlook for the power industry, emphasizing the continuation of green transformation and market-oriented reforms in 2026 [1]. Core Insights - The power industry is expected to maintain a balance between supply and demand, with a significant increase in renewable energy installations and generation, while coal power transitions to a peak-shaving role [1][4]. - The overall credit status of the industry remains strong, with high-rated state-owned enterprises dominating the bond issuance landscape, reflecting significant financing advantages [1][19]. - The report highlights the need for improved system regulation and consumption capacity to support the accelerated green transition of the power supply structure [3][4]. Supply Capacity Analysis - The total installed power generation capacity in China reached 3,890 million kilowatts by the end of 2025, marking a 16.1% year-on-year increase, with renewable energy being the main driver of this growth [3]. - Wind and solar power installations reached a combined total of 1,840 million kilowatts, with solar power growing by 35.4% and wind power by 22.9% year-on-year [3]. - The transition of coal power to a peak-shaving role is becoming more pronounced, although the system's regulation and consumption capacity require urgent enhancement [3][4]. Demand Matching Capability Analysis - The total electricity consumption in China was 10.37 trillion kilowatt-hours in 2025, reflecting a 5.0% year-on-year growth, although the growth rate has slowed compared to previous years [6]. - The demand for electricity is expected to continue growing steadily in 2026, driven by the third industry and urban residents' electricity consumption [9]. Price Change Analysis - Fuel prices have declined, but installation costs are expected to rise, leading to continued pressure on electricity prices in 2026 [10][16]. - The average on-grid electricity price is anticipated to face downward pressure due to the marketization of electricity pricing and the rising costs of renewable energy installations [10][16]. Policy Direction - The report emphasizes that the focus for 2026 will be on deepening the green transition and improving the unified market system, with policies aimed at promoting efficient consumption of renewable energy [17][18]. - The establishment of a new power system and the construction of a national unified electricity market are highlighted as key areas for policy development [17][18]. Credit Rating Situation Analysis - The bond issuance scale in the power industry reached 1,797.64 billion yuan in 2025, a significant increase of 62.24% year-on-year, with the majority of issuers being high-rated state-owned enterprises [19][20]. - The report notes that the credit ratings of power enterprises remain high, with most issuers rated AAA, reflecting the industry's overall strong credit quality [20][26]. Cycle Development Outlook - The power demand is expected to grow steadily alongside economic recovery and electrification processes, maintaining a balance between supply and demand [28]. - The report anticipates that the electricity pricing mechanism will become more flexible, with potential downward pressure on market transaction prices [28][29].

完善激励与约束并重的政策组合拳，激发企业内生动力，引导其从"成本视角"转向"效益视角"看待绿色 转型。当前政策多强调强制性达标要求，容易让企业视清洁运输为单纯的成本负担和合规要求。未来应 在严格坚守排放标准与绩效评级（如A级、B级企业门槛）这一"约束底线"的同时，强化"激励高线"。 例如，对清洁运输比例持续领先或采用零排放车辆进行中长途运输的企业，给予更大幅度的税收减免、 环境税优惠、绿色信贷额度及利率支持。同时，推动将供应链的清洁化水平纳入龙头企业供应商评价体 系，并鼓励金融机构开发与碳减排量挂钩的金融产品，让企业的绿色投入能够转化为市场竞争力和融资 便利。通过经济杠杆和市场机制，使清洁运输成为企业提升竞争力、塑造品牌形象的内在驱动。 整治清洁运输"最后一公里换车头"的乱象，绝非一蹴而就的简单任务。它要求我们必须正视政策执行中 的复杂性，强化系统性思维。要在监管上实现从"末端核查"到"全程穿透"的升级，在保障上完成从"压 力传导"到"服务支撑"的转变，在激励上推动从"被动合规"到"主动求效"的跃迁，在责任上构建从"单一 主体"到"多元共治"的格局。唯有如此，才能真正杜绝形式主义，畅通绿色运输政策落实渠道，让 ...

Group 1 - The core viewpoint of the articles highlights the growth and transformation of China's copper smelting industry, emphasizing the shift towards green and intelligent manufacturing in response to global trends and domestic demands [2][6]. - China's refined copper production is projected to reach 13.644 million tons in 2024, marking a 5.1% increase from 2023, with a year-on-year growth of 9.9% observed in the first seven months of 2025 [1][2]. - The copper smelting industry in China is experiencing a continuous trade deficit, with the total import and export value of related products reaching 811.856 billion yuan in 2024, and the trade deficit expanding by 114.513 billion yuan [6][7]. Group 2 - The average import price of copper smelting-related products has shown an upward trend from 2019 to July 2025, with significant increases during the 2020-2021 period due to supply chain disruptions caused by the COVID-19 pandemic [8]. - China's position as a major consumer in the global refined copper market is expected to strengthen, with the country's share of global refined copper production and sales anticipated to increase further [2].

Core Viewpoint - Dongying City is focusing on a profound transformation towards a comprehensive green transition, as highlighted in the government work report, which identifies this as one of the key development themes for the new year [1][2]. Group 1: Ecological Restoration - The green transition in Dongying is rooted in systematic restoration of the Yellow River Delta's ecological foundation, with a focus on creating the Yellow River Estuary National Park [4]. - Significant investments have led to tangible results, including the restoration of 72,500 acres through reforestation and wetland recovery, and the addition of 74,000 acres of wetland since the 14th Five-Year Plan [4]. - The "Yellow River Estuary Wetland Restoration Model" has been developed, promoting a cycle of "one-time restoration, natural succession, and long-term stability" [4]. - Water management is crucial, with 241 kilometers of waterways cleared and an average annual ecological water replenishment of over 170 million cubic meters in recent years [4]. Group 2: Pollution Prevention - Pollution prevention is a key aspect of Dongying's transformation, with the city achieving top marks in provincial pollution prevention assessments [7]. - The average PM2.5 concentration in Dongying was reported at 24 micrograms per cubic meter from January to October 2025, marking the best improvement in the province [7]. - The proportion of good-quality water bodies in national control sections reached 66.7% during the same period, with a significant reduction in inferior water bodies [7]. Group 3: New Energy System - The establishment of a new energy system is a strategic focus for Dongying, aiming to fundamentally change the city's energy supply structure [9]. - By the end of 2025, renewable energy installed capacity is expected to reach 10.8838 million kilowatts, accounting for 69% of the total power generation capacity, a 40 percentage point increase from the end of the 13th Five-Year Plan [9]. - The city is developing offshore wind and solar energy projects, including the first gigawatt-level offshore solar project in the country [9]. - A significant project, the Dongying Zero Carbon Industrial Park, aims for 100% green electricity and zero-carbon production across the entire industrial chain [9]. Group 4: Future Development Plans - The report outlines plans for continued integrated development of wind, solar, and hydrogen energy, with an additional 800,000 kilowatts of renewable energy and new energy storage capacity expected in the year [11]. - The commitment to promoting comprehensive green transformation reflects Dongying's determination to reshape its development logic through systematic thinking [11].

Core Viewpoint - The People's Bank of China (PBOC) has introduced eight new financial policies aimed at supporting the high-quality development of the real economy, focusing on structural adjustments and precise support rather than short-term stimulus [1][2]. Group 1: Monetary Policy Adjustments - The PBOC announced a reduction of 0.25 percentage points in various structural monetary policy tool rates, with the one-year re-lending rate now at 1.25% [1]. - The new rates for agricultural and small business re-lending are set at 0.95%, 1.15%, and 1.25% for 3-month, 6-month, and 1-year terms respectively, while the re-discount rate is at 1.5% [1]. - There is still room for further interest rate cuts and reserve requirement ratio reductions, as the average reserve requirement ratio is currently at 6.3% [2]. Group 2: Support for Key Sectors - The PBOC will merge the quotas for agricultural and small business re-lending, increasing the re-lending quota by 500 billion yuan, with a dedicated quota of 1 trillion yuan for private enterprises [3]. - The quota for technology innovation and technological transformation re-lending has been raised from 800 billion yuan to 1.2 trillion yuan, expanding support to high R&D investment private SMEs [3]. - The minimum down payment ratio for commercial property loans has been lowered to 30%, aimed at promoting inventory reduction in the commercial real estate market [3]. Group 3: Focus on Structural Optimization - The policy adjustments target key weaknesses in the current economic operation, aiming to alleviate financing difficulties for private and small enterprises [4]. - The expansion of support for carbon reduction and service consumption reflects a strong emphasis on green transformation and the potential of service consumption to foster new growth drivers [4]. - The gradual implementation of these policies is expected to stabilize economic expectations and promote high-quality development [4].

Core Insights - The Circular Economy Industry Innovation and Development Conference was held in Fengcheng, Jiangxi Province, focusing on the theme "Circular Empowerment, Innovative Symbiosis" and attracting over 200 representatives from various sectors to discuss the development of the circular economy [1] Group 1: Circular Economy Development - Fengcheng has transformed into a national-level green industry demonstration base, with a total output value of the circular economy industry reaching 56.85 billion yuan in 2024 [2] - The industrial cluster in Fengcheng focuses on recycled copper, recycled aluminum, and recycled plastics, with recycled waste copper accounting for about 12% and recycled waste aluminum for about 7.3% of the national total [2] Group 2: Environmental Impact - The implementation of a closed-loop system for resources in Fengcheng has led to significant industrial upgrades and a reduction of carbon emissions by 11.76 million tons in 2024 through the utilization of recycled copper and aluminum [3] Group 3: Strategic Goals - The "Blue Book on the High-Quality Development of Circular Economy in Fengcheng, Jiangxi" was released, outlining the development logic and practical experiences of Fengcheng, with the goal of establishing a "national green supply chain hub" [4][5]

Investment Rating - The report maintains a "Buy" rating for several companies in the Japan Industrial Electronics sector, including Anritsu, Panasonic HD, Hitachi, Sumitomo Electric, Fujikura, SWCC, Mitsubishi Electric, and Daihen. Furukawa Electric and Fuji Electric are rated as "Neutral" [7]. Core Insights - The Japan Industrial Electronics sector is poised for growth driven by technological advancements in AI server power and optics, with companies like Hitachi, Mitsubishi Electric, and Panasonic actively developing new business models to leverage AI's importance [1][12]. - The report anticipates that the implementation of physical AI in social infrastructure will gain momentum, with conglomerates expected to progress in their business portfolio strategies by 2026 [1]. - The sector is experiencing a shift towards higher voltage systems in data centers, which presents opportunities for electrical equipment manufacturers skilled in high voltage applications [22][24]. Earnings Estimates and Target Prices - The report revises FY3/26E-FY3/28E operating profit estimates for the sector by an average of 0%/-1%/-1%, while raising 12-month target prices by an average of 4% [3][7]. - Specific target price adjustments include Anritsu from 2,400 million JPY to 2,600 million JPY, Panasonic HD from 2,100 million JPY to 2,300 million JPY, and Hitachi from 5,900 million JPY to 6,000 million JPY [7][3]. Technological Changes in AI Server Power - Companies like Hitachi and Mitsubishi Electric are increasing their presence in AI server power solutions, focusing on high-voltage DC systems to reduce conversion losses and improve efficiency [12][13]. - The report highlights the importance of battery backup units (BBUs) and hybrid supercapacitors (HSCs) in managing power fluctuations in generative AI data centers, with Panasonic having a strong position in BBUs [16][12]. Technological Changes in AI Server Optics - The report notes a significant shift towards higher communication speeds in data centers, moving from 200-400 Gbps to 800-1.6 Tbps, and the transition to Co-packaged Optics (CPO) [28][29]. - Companies such as Mitsubishi Electric, Sumitomo Electric, and Furukawa Electric are increasing production of optical devices and connectors to meet rising demand [30][31]. Implementation of Physical AI - Hitachi, Mitsubishi Electric, and Panasonic are focusing on integrating AI into industrial applications, with expectations of increased competition as software companies also enter the physical AI space [47][49]. - The report categorizes companies in the sector based on their involvement in AI infrastructure, AI-enabled revenues, and productivity gains, with Hitachi identified as a key beneficiary across all categories [48][49].

Economic Overview - The overall economic operation in Qinghai Province is stable with progress, supported by industrial production growth, strong infrastructure investment, and increasing retail sales of consumer goods [1][2][3] Industrial Production - From January to November, the industrial added value of large-scale industries increased by 7.1% year-on-year, surpassing last year's growth rate of 6.7% [1] - The manufacturing sector saw a significant increase of 10.4%, which is 3.3 percentage points higher than the overall industrial growth [1] - Among 35 industrial categories, 18 reported year-on-year growth, resulting in a growth coverage of 51.4% [1] - In terms of products, 61 out of 120 major industrial products experienced production growth, with a growth coverage of 50.8% [1] - The production of lithium-ion batteries for electric vehicles surged by 46.0%, while clean energy developments showed promising trends with wind power generation increasing by 7.5% and solar power generation by 9.5% [1] Investment Trends - Fixed asset investment in the province decreased by 9.6% year-on-year, although the decline rate narrowed by 2.1 percentage points compared to the first ten months [2] - Infrastructure investment grew by 19.4%, accounting for 33.8% of total investment and contributing 5.0 percentage points to overall investment growth [2] - Notable growth was observed in the transportation sector, with a 56.3% increase, and telecommunications services growing by 34.1% [2] - In November, investment saw a year-on-year increase of 17.3%, marking the first positive growth since May [2] Consumer Market - The retail sales of consumer goods increased by 2.4% year-on-year, with retail sales from above-designated size units growing by 2.3% [3] - The "trade-in" policy has positively impacted sales, with significant growth in home appliances (21.8%), building materials (10.3%), and automobiles (6.2%) [3] - Basic living goods saw slight growth, with food and daily necessities increasing by 3.2% and 3.7%, respectively [3] - Smart products maintained rapid growth, with wearable smart devices' sales increasing by 3.9 times and smart home appliances by 28.6% [3]