Revenue and Expenditure Overview - In 2025, total fiscal revenue reached 21.6 trillion, completing 98.3% of the initial budget, while total expenditure was 28.74 trillion, completing 96.8% of the budget, marking the lowest completion rate on record[3] - December 2025 fiscal revenue was 1.55 trillion, down 25% year-on-year, with a significant drop of 24.9 percentage points from the previous month[4] - December fiscal expenditure was 3.89 trillion, down 1.8% year-on-year, continuing a negative growth trend for three consecutive months[11] Structural Insights - Central government expenditure grew by 5.7% year-on-year, significantly outpacing local government expenditure, which only grew by 0.2%[3] - The proportion of general fiscal expenditure directed towards people's livelihoods increased to 38%, up 1.3 percentage points from 2024, while infrastructure-related expenditure decreased to 19.5%, down 1.9 percentage points[3] Future Projections - For 2026, it is anticipated that fiscal expansion will remain at a level comparable to 2025, with a focus on "investing in people" and an early release of "national subsidies" to stimulate economic growth[6] - A projected 580 billion in carryover funds from 2025 is expected to supplement the 2026 fiscal budget[2] Tax Revenue Expectations - A rebound in prices, particularly a narrowing decline in the Producer Price Index (PPI), is expected to increase tax revenue by approximately 1.4 percentage points, translating to an additional 2.4 trillion in tax revenue[8] - The PPI is forecasted to improve from -2.6% to -0.4% in 2026, which will positively impact tax bases, especially for value-added tax and corporate income tax[8] Short-term Considerations - Key areas of focus include local government GDP targets, potential carryover funds, and the performance of the economy in the first quarter of 2026, particularly in real estate and infrastructure[8]

Group 1: Report Industry Investment Rating - No relevant content provided Group 2: Core Viewpoints of the Report - The recent price increase is structural and unlikely to have a trend - setting impact on interest rates. The central bank may keep monetary policy stable or make minor adjustments, and the bond market may recover after a short - term shock [5][16][35] Group 3: Summary Based on Related Content 1. Current Price Situation - In December 2025, CPI increased by 0.1 percentage points year - on - year to 0.8%, rising for 4 consecutive months to the highest level since March 2023. PPI's year - on - year decline narrowed, and its month - on - month figure was at or above zero for 5 consecutive months, reaching the highest level since September 2024 [1][8] 2. Structural Characteristics of Price Increase - **CPI**: Gold price increases have continuously pushed up CPI. The year - on - year growth rate of other supplies and services in CPI rose from 3% - 5% in 2024 to 5% - 17% in 2025, contributing 0.5 percentage points to the year - on - year CPI growth rate in December 2025. In the past two months, vegetable prices have also had a short - term impact, with the contribution to CPI year - on - year growth rising from about - 0.3% to 0.3% and 0.4% in November and December [2][9] - **PPI**: It is mainly driven by the non - ferrous metals industry. From August to December 2025, the cumulative month - on - month increases in PPI of non - ferrous metal mining and dressing and non - ferrous metal smelting and rolling processing industries were 14.9% and 8.7% respectively [2][9] 3. Impact of Price Increase on Interest Rates - **Lack of Impact on Corporate Profit and Financing Demand**: Although PPI has improved, corporate profits have not improved. In November 2025, the total profit of industrial enterprises decreased by about 13% year - on - year, so it is difficult to drive up corporate financing demand [3][17] - **Limited Monetary Policy Response**: The central bank's monetary policy has limited ability to regulate input - driven and industry - concentrated price increases. Referring to the situation of pork prices in 2019, the central bank may not respond significantly [4][17] 4. Historical Cases of Limited Impact of Structural Price Increase on Interest Rates - **2019 Pork Price Case**: In the second half of 2019, pork prices significantly pushed up CPI, but the central bank did not tighten monetary policy. Instead, it kept interest rates stable and even cut the MLF rate by 5bps in November 2019 [4][17] - **2021 Coal Price Case**: In 2021, coal prices soared due to supply - side factors, and PPI rose significantly. The central bank regarded it as a short - term cost shock, maintained normal monetary policy, and did not significantly raise the interest rate center [24][26]

Core Viewpoint - The National Development and Reform Commission (NDRC) emphasizes the need for more proactive fiscal policies and moderately loose monetary policies to promote price recovery, highlighting the importance of integrating existing and new policies to foster economic growth and price recovery [1] Group 1 - The Consumer Price Index (CPI) and Producer Price Index (PPI) have both shown signs of recovery [1] - Future policies will focus on implementing more aggressive fiscal measures and maintaining a moderately loose monetary stance [1] - The integration of stock and incremental policies is crucial for enhancing efficiency and promoting a positive interaction between economic growth and price recovery [1]

Core Viewpoint - The National Development and Reform Commission (NDRC) emphasizes the need for more proactive fiscal policies and moderately loose monetary policies to promote price recovery, highlighting the importance of integrating stock and incremental policies to foster a positive interaction between economic growth and price recovery [1] Group 1 - The Consumer Price Index (CPI) and Producer Price Index (PPI) have both shown signs of recovery [1] - Future policies will focus on implementing more aggressive fiscal measures and maintaining a moderately loose monetary stance [1] - The promotion of price recovery will be a key consideration in monetary policy [1]

Core Viewpoint - The core CPI in China is expected to moderately rebound in 2025, with a projected increase of 0.7% compared to the previous year, marking a 0.2 percentage point rise in growth rate from the prior year [1][3]. Group 1: CPI Trends and Influences - The overall price level in China has been relatively low, with the CPI remaining stable, and a year-on-year increase of 0.8% in December 2025 [1][4]. - Structural characteristics of CPI are evident, with significant impacts from declining food and energy prices; food prices fell by 1.5% in the previous year, contributing to a 0.27 percentage point decrease in CPI [2][3]. - Energy prices are projected to decline by 3.3% in 2025, further contributing to a 0.25 percentage point decrease in CPI [2]. Group 2: Factors Driving CPI Rebound - The rebound in core CPI is attributed to effective domestic demand expansion policies, including the "old for new" consumption policy, which has improved supply-demand relationships in certain sectors [3][4]. - In December 2025, the core CPI rose by 1.2%, maintaining above 1% for four consecutive months, with industrial consumer goods prices (excluding energy) increasing by 1.1% [3][4]. - Seasonal factors, such as increased food consumption during the New Year holiday and upcoming Spring Festival, are expected to support a seasonal rise in CPI [4]. Group 3: Future Outlook and Policy Measures - The government plans to strengthen capacity regulation in key industries and improve product standards, which is expected to support price recovery [5]. - For 2026, the focus will be on leveraging macroeconomic policy effects to expand consumer spending and address supply-demand imbalances to promote reasonable price increases [5].

Core Viewpoint - The National Bureau of Statistics indicates that favorable factors are accumulating to promote a moderate recovery in CPI, supported by effective implementation of consumption-boosting policies and financial measures [1] Economic Indicators - In December, the CPI rose by 0.8% year-on-year, marking the highest increase since March 2023 [1] - Increased food consumption during the New Year holiday and active service consumption such as dining out and travel are contributing to seasonal CPI recovery [1] Policy Support - The government plans to strengthen capacity regulation in key industries and improve product standards and quality, which will support price recovery [1] - The integration of macro policies is expected to promote reasonable price recovery, benefiting both enterprises and residents [1] Consumer Behavior - Early January data suggests a general increase in prices for fresh fruits, airline tickets, and travel services, indicating a stable upward trend [1] - The upcoming nine-day Spring Festival holiday is anticipated to further boost consumption and support CPI growth [1]

Group 1 - The People's Bank of China (PBOC) announced 8 policy measures to support the optimization of economic structure transformation [1] - The interest rate for various structural monetary policy tools will be reduced by 0.25 percentage points, with the one-year re-lending rate decreasing from 1.5% to 1.25% [1] - The re-lending quota for supporting agriculture and small enterprises will be increased by 500 billion yuan, with a dedicated quota of 1 trillion yuan for private enterprises [1] Group 2 - The quota for re-lending for technological innovation and technological transformation will be increased from 800 billion yuan to 1.2 trillion yuan, including support for high R&D investment private SMEs [1] - The existing private enterprise bond financing support tool and technological innovation bond risk-sharing tool will be merged, providing a total re-lending quota of 200 billion yuan [1] - The carbon reduction support tool will be expanded to include more projects with carbon reduction effects, guiding banks to support comprehensive green transformation [2] Group 3 - The minimum down payment ratio for commercial property loans will be lowered to 30% to support the destocking of the commercial real estate market [2] - Financial institutions are encouraged to enhance their foreign exchange risk hedging services, providing cost-effective and flexible tools for enterprises [2] - The PBOC will maintain liquidity and conduct flexible government bond trading operations alongside other liquidity tools [3] Group 4 - The PBOC sees room for further reserve requirement ratio (RRR) and interest rate cuts this year, aiming to keep social financing costs low [4] - The PBOC will focus on promoting stable economic growth and reasonable price recovery as key considerations for monetary policy [5] - The PBOC will further expand the support areas for service consumption and elderly care re-lending, including the health industry once recognized [6] Group 5 - The State Administration of Foreign Exchange (SAFE) anticipates stable operation of the foreign exchange market by 2026, with smooth cross-border capital flows [8] - SAFE will enhance monitoring of cross-border capital flows and improve macro-prudential management to maintain stability in the foreign exchange market [8] - New policies will be introduced to support enterprises in going global and developing foreign trade, including cross-border capital management for multinational companies [8] Group 6 - Further optimization of cross-border fund policies for Qualified Foreign Institutional Investors (QFII) will be researched, along with orderly issuance of investment quotas for Qualified Domestic Institutional Investors (QDII) [9] - Efforts will be made to simplify foreign exchange registration procedures for foreign direct investment, facilitating the use of investment funds [9] - The cross-border fund centralized operation management policy will be promoted nationwide for more medium-sized multinational companies [9]

Core Viewpoint - The People's Bank of China (PBOC) has reported positive changes in domestic price levels, indicating a recovery in consumer prices and a narrowing decline in producer prices, which supports the high-quality development of the real economy [1][3]. Group 1: Consumer Price Index (CPI) Trends - As of December 2025, the CPI has increased by 0.8% year-on-year, reaching the highest level since March 2023 [1]. - The core CPI, excluding food and energy, has risen by 1.2% year-on-year, maintaining a growth rate above 1% for four consecutive months [1]. - The Producer Price Index (PPI) has seen a reduction in its year-on-year decline by 1.7 percentage points compared to the low point in July, with a month-on-month increase for three consecutive months [1]. Group 2: Price Changes in Specific Categories - Significant declines have been observed in food and transportation categories, with pork prices dropping by 30% and transportation tool prices decreasing by 11.7% since the beginning of 2023 [3]. - Conversely, prices in education, culture, and entertainment have increased by 3.6%, with tourism prices surging by 14.4%, indicating an ongoing optimization and upgrading of consumer spending structures [3]. Group 3: Macroeconomic Policies and Market Confidence - The synergistic effect of macroeconomic policies is strengthening, with advancements in the domestic unified market and the development of new economic drivers, which are expected to enhance supply-demand matching and boost market confidence [3]. - The PBOC has maintained a supportive monetary policy stance, ensuring ample liquidity and a significant growth in financial totals that outpace nominal GDP growth [3]. - Moving forward, the PBOC aims to implement a moderately accommodative monetary policy to foster stable economic growth and reasonable price recovery, aligning with the central economic work conference's directives [3].

1. Report Industry Investment Rating No relevant content provided. 2. Report Core Viewpoints - In December 2025, China's prices recovered. CPI rose 0.8% year-on-year, reaching a new high since March 2023, with food prices playing a significant role, and core CPI remaining stable. PPI's year-on-year decline narrowed to -1.9%, with three consecutive months of positive month-on-month growth, and prices in upstream and new-quality productivity-related industries were well-supported. In 2026, the central bank may continue its moderately loose monetary policy, with a new focus on "optimizing supply." It may focus on price recovery, keeping financing costs low, strengthening the prevention and control of financing platform debt risks, and promoting financial opening-up. In the US, the December non-farm payrolls were lower than expected, but the unemployment rate decreased. Traders postponed the first interest rate cut in 2026 to June, with an expected total cut of 50BP for the year [2][4][118]. 3. Summary by Relevant Catalogs 3.1 Macro News - **CPI and PPI Trends**: In December 2025, CPI rose 0.8% year-on-year, with food prices rising 1.1% and contributing significantly. Core CPI was stable at 1.2%. PPI's year-on-year decline narrowed to -1.9%, and it had three consecutive months of positive month-on-month growth [4][13][29]. - **Factors Affecting CPI**: Food prices, especially fresh vegetables and fruits, drove CPI growth, while energy prices, affected by international oil prices, restricted CPI growth [19]. - **Factors Affecting PPI**: Domestic policies, seasonal demand, input factors, and new-quality productivity all influenced PPI trends. Upstream prices were supported by policies and seasonal demand, and new-quality productivity-related industries contributed to price increases [33][38]. - **Central Bank Policy**: The 2026 central bank work conference added "optimizing supply" as a policy focus, emphasizing balanced credit supply, reasonable price recovery, and support for financing platform debt risk resolution [43]. - **US Non-farm Payrolls**: In December 2025, US non-farm payrolls increased by 50,000, lower than expected, and the unemployment rate decreased to 4.4%. Traders postponed the first interest rate cut to June, with an expected 50BP cut for the year [4][48]. 3.2 Meso-level High-frequency Data - **Consumption**: Passenger car retail and wholesale volumes increased year-on-year, but movie box office revenue decreased. Three major household appliances' retail volume and revenue showed mixed trends [4][9][54]. - **Transportation**: Passenger transportation activities were relatively high, with increases in migration, flight numbers, and subway ridership. However, freight transportation, including postal, railway, and highway, decreased [4][9][59]. - **Industry**: Most industrial indicators showed a year-on-year decline, including steel production, coal consumption, and factory operating rates [4][9][64]. - **Real Estate**: The real estate market continued to decline, with decreases in housing sales area and land transactions [9][76][80]. - **Prices**: Food prices showed mixed trends, with pork prices down and vegetable prices up. Industrial product prices also varied, with some rising and some falling [4][9][90]. 3.3 Bond and Foreign Exchange Markets - **Bond Yields**: Most government bond yields increased, with significant adjustments at the long end. The yields of national debt, policy bank bonds, local government bonds, and interbank certificates of deposit all changed to varying degrees [4][104][109]. - **Foreign Exchange Rates**: The US dollar to RMB exchange rate decreased, and the yields of ten-year government bonds in the US, Japan, the UK, and Germany also changed [113][117]. 3.4 Investment Recommendations - The bond market in 2026 may perform better than expected. Attention should be paid to the potential rebound of long-term bonds. It is recommended to focus on long-term bond trading opportunities, allocate 3 - 5Y capital bonds for coupon income, and explore multi-asset investment opportunities [4].

Group 1 - The core viewpoint of the article is that a chemical price surge is imminent, presenting significant investment opportunities, particularly in the chemical ETF sector, which has seen a remarkable increase of over 30% recently [1][34] - The chemical price increase is primarily driven by global supply issues, with major chemical companies like Wanhua Chemical, BASF, Huntsman, and Dow announcing price hikes for MDI and TDI products in December 2025 [3][37] - The supply constraints are attributed to permanent capacity reductions in Europe and Asia, with ExxonMobil and other multinational companies planning to close several production facilities, resulting in a total capacity loss of 4 million tons per year [9][43] Group 2 - In Europe, the chemical industry faces three main challenges: rising energy costs due to the loss of cheap Russian gas, stringent carbon emission policies, and aging production facilities, leading to a structural cost disadvantage [10][44][45] - Japan and South Korea are also experiencing capacity reductions, with predictions that South Korea's chemical production capacity could decrease by 18% to 25% by 2027 due to similar issues [13][47] - Short-term supply disruptions, including unexpected plant shutdowns and maintenance, are exacerbating the supply tightness, further driving up prices [16][50] Group 3 - The article suggests that the price increase is not a short-term fluctuation but a medium to long-term trend supported by three factors: the depreciation of the US dollar increasing raw material costs, a shift in policy towards promoting reasonable price increases, and signs that the chemical industry cycle has bottomed out [17][51][54][56] - The overall price surge is part of a broader trend affecting various sectors, including upstream commodities and electronic components, indicating a widespread inflationary environment [25][59] - The chemical industry is foundational to modern life, with price increases in chemicals likely to impact consumer goods, construction materials, and electronics, ultimately leading to higher prices for end products [26][60][62] Group 4 - The article concludes that the current price increases in the chemical sector are just the beginning, with a multi-layered logic explaining the trend: permanent global capacity reductions, dollar depreciation, policy shifts towards inflation, and a recovering industry cycle [29][63] - The expectation is that chemical prices will continue to rise into 2026 and possibly 2027, which is viewed as a positive sign for economic health and a necessary step out of low inflation traps [68]