Group 1 - The consensus among experts is to consider the introduction of incremental policy tools, such as special government bonds, to strengthen infrastructure, combat the pandemic, support enterprises, ensure livelihoods, and restore consumption in response to increasing economic downward pressure [1] - There is a pressing need for enhanced fiscal policy, as the balance between revenue reduction and expenditure increase is becoming more challenging, necessitating the use of incremental tools to maintain fiscal balance [2] - The first quarter saw a significant decline in government fund budget revenue, down 25.6% year-on-year, indicating a substantial gap compared to the annual growth target of 0.6% [2] Group 2 - Experts suggest that in addition to utilizing state-owned enterprise profits and surplus funds, the issuance of special government bonds and increasing budget deficits could be viable methods to expand fiscal capacity [3] - Approximately 9.5 billion yuan of special government bonds are set to mature this year, and the necessity for issuing new special bonds has increased due to rising pandemic-related expenditures and declining land fiscal revenues [3] - It is estimated that the issuance of special government bonds could reach a scale of 1 trillion yuan, with a recommendation to issue 2 trillion yuan to support infrastructure investment and maintain economic stability [3][4] Group 3 - The potential use of newly issued special government bonds is primarily aimed at boosting infrastructure investment, as well as supporting pandemic relief and ensuring livelihoods [4] - The expected additional fiscal expenditure for infrastructure, pandemic relief, and livelihood support could reach 3.7 trillion yuan, with 1.36 trillion yuan specifically allocated for pandemic and livelihood-related expenses [4] - The issuance of special government bonds may involve a combination of targeted and public offerings, with a focus on maintaining liquidity through monetary policy support [5]

Revenue Performance - In June 2025, the national general public budget revenue decreased by 0.3% year-on-year, a decline from May's 0.1%[1] - Tax revenue increased by 1.0% year-on-year, up from 0.6% in May, while non-tax revenue fell by 3.7%, a larger decline than the previous month's 2.2%[5] - For the first half of 2025, general public budget revenue cumulatively decreased by 0.3%, matching the performance from January to May[7] Expenditure Trends - In June 2025, general public budget expenditure grew by 0.4% year-on-year, down from 2.6% in May[1] - Cumulatively, general public budget expenditure increased by 3.4% in the first half of 2025, a slowdown from 4.2% in the previous period[9] - By June, general public budget expenditure completed 47.6% of the annual budget, slightly below the five-year average of 48.1%[9] Government Fund Insights - In June, government fund revenue surged by 20.8% year-on-year, a significant recovery from the previous month's decline of 8.1%[10] - Cumulatively, government fund revenue decreased by 2.4% in the first half of 2025, with land transfer revenue down by 6.5%[10] - Government fund expenditure in June increased by 79.2% year-on-year, driven by accelerated issuance of special bonds[10] Future Fiscal Policy Outlook - The Central Political Bureau meeting indicated that macro policies will continue to be proactive in the second half of 2025, emphasizing the need for increased government bond issuance and improved fund utilization[12] - Potential measures may include raising the fiscal deficit ratio and increasing the issuance of special bonds to stimulate domestic demand and counteract external economic slowdowns[12]

Core Viewpoint - The "consumption upgrade battle" is entering its final sprint phase, with the full allocation of 300 billion yuan in special government bonds aimed at stimulating consumption, providing strong momentum for the market in the second half of the year [1][14]. Group 1: Economic Stimulus Plan - The unprecedented economic stimulus plan began in early 2025, with funds allocated in four batches, totaling 300 billion yuan, specifically targeting consumption enhancement [3]. - The first two batches of 162 billion yuan were completed in January and April, while the third batch of 69 billion yuan was fully allocated by the end of July [3]. - This phased funding approach helps avoid market volatility and resource waste, ensuring precise economic support [3]. Group 2: Consumption Data and Trends - As of July 16, the policy has significantly boosted sales in various sectors, with household appliance sales showing notable growth [5]. - Specific growth rates include a 24.1% increase in communication equipment, 25.4% in cultural and office supplies, and 22.9% in furniture, contributing to a 5% year-on-year increase in total retail sales of consumer goods [5]. - Approximately 30 yuan of every 100 yuan spent on household appliances is attributed to policy stimulation [5]. Group 3: Regional Implementation and Consumer Engagement - The implementation of the policy varies by region, with local authorities encouraged to optimize subsidy distribution and ensure equitable use of funds [5]. - Consumers are advised to stay informed about local announcements to take full advantage of policy benefits [5]. Group 4: Market Outlook and Consumer Behavior - The upcoming traditional promotional periods, such as "Golden September and Silver October," are expected to align with policy benefits, further driving consumption growth [5][12]. - There is a significant potential for demand in the home appliance sector, particularly for replacement purchases, as current sales volumes remain low compared to existing appliance stock [10]. - Companies in the home appliance sector are accelerating innovation and enhancing product features to meet rising consumer demand [8].

Core Viewpoint - The overall performance of public finance in the first half of 2025 is stable, with a slight decline in revenue growth, indicating the need for continued improvement in tax and government fund income through PPI and land market enhancements [5][23]. Group 1: Public Finance Revenue - In the first half of 2025, public finance revenue showed a cumulative year-on-year decline of 0.3%, slightly lower than the previous year's growth of 1.3% [1][6]. - Tax revenue decreased by 1.2% year-on-year, an improvement compared to last year's decline of 3.4%, while non-tax revenue growth significantly slowed from 25.4% last year to 3.7% this year [1][8]. - The decline in non-tax revenue is attributed to a high base last year and a reduced reliance on non-tax income by the government [1][6]. Group 2: Monthly Performance - In June, tax revenue increased by 1.0% year-on-year, slightly higher than the previous value, while non-tax revenue fell by 3.7%, indicating an expanded decline [2][9]. - Domestic value-added tax and corporate income tax recorded year-on-year increases of 5.0% and 2.7%, respectively, contributing positively to June's fiscal revenue growth [2][11]. - The equipment manufacturing industry, modern services, and cultural sports entertainment sectors showed strong tax performance, reflecting the economic recovery in these areas [2][11]. Group 3: Fiscal Expenditure - Narrow fiscal expenditure in June saw a year-on-year decline of 0.4%, down from 2.6% previously, influenced by a decrease in non-tax revenue and a lull in infrastructure funding [3][12]. - Technology spending led the expenditure categories with an 18.1% year-on-year increase, while infrastructure-related expenditures showed weak performance, particularly in transportation and agriculture [3][14]. - The overall expenditure progress for the first half of the year was at 47.6%, indicating a slower pace compared to previous years, with expectations for acceleration in the second half [3][13]. Group 4: Government Fund Income - Government fund income in the first half of 2025 decreased by 2.4% year-on-year, primarily due to continued weakness in the land market, with land transfer income down 6.5% [4][19]. - In June, government fund budget revenue surged by 20.8%, marking a significant increase, although July data showed a notable decline, raising questions about the sustainability of this recovery [4][19]. - Government fund budget expenditure rose sharply by 79.2% year-on-year, largely driven by the issuance of special bonds, indicating a significant increase in overall fiscal spending [4][20].

Group 1 - The Ministry of Finance reported that in the first half of the year, a total of 2.6 trillion yuan of new local government general and special bonds were issued to support major project construction in key areas [1] - An additional budget of 658.3 billion yuan for long-term special government bonds was allocated to support "two重" projects and "two新" initiatives [1]

Group 1 - The Yarlung Tsangpo River downstream hydropower project has officially commenced, with a total investment of approximately 1.2 trillion yuan, which is about six times the investment of the Three Gorges Project [4][3] - The project will construct five cascade power stations, with an estimated installed capacity of 60 million kilowatts, based on the average cost of hydropower projects in 2023 [4][4] - The construction is expected to generate an annual engineering order volume of 33.6 to 44.8 billion yuan over a 15-20 year period, significantly boosting the construction sector [4][4] Group 2 - China Power Construction Corporation is a leading enterprise in water conservancy and hydropower construction, holding over 65% of the construction tasks for large and medium-sized hydropower stations in China [6][6] - The company is projected to secure approximately 21.8 to 29.1 billion yuan in engineering volume from the Yarlung Tsangpo River downstream project, which would account for 1.7% to 2.3% of the company's new contract amount in 2024 [6][6] - In the first five months of 2025, the company signed 488 new hydropower projects with a contract amount of 65.387 billion yuan, reflecting a year-on-year increase of 60.66% [6][6]

Core Viewpoint - China's manufacturing PMI rose to 49.7% in June, indicating a rebound due to effective policy measures, although export pressures remain [1][2]. Economic Indicators - The manufacturing PMI increased by 0.2 percentage points from the previous month, marking the second consecutive month of growth [2]. - The non-manufacturing PMI also rose by 0.2 percentage points to 50.5% [2]. - New export orders index increased by 0.2 percentage points, continuing its upward trend for two months [2]. - Special bond issuance reached approximately 21,607 billion yuan in the first half of 2024, a 44.7% increase compared to 14,935 billion yuan in the same period of 2023 [2]. Policy Measures - The government is expected to implement proactive fiscal policies in the second half of the year, particularly through special bonds and local government financing to support economic growth and counteract tariff impacts [3][5]. - The upcoming Politburo meeting at the end of July is anticipated to be a critical point for policy adjustments [3][5]. Inflation and Economic Growth - The Producer Price Index (PPI) has recorded negative growth for 32 consecutive months since October 2022 [2]. - The Consumer Price Index (CPI) showed a year-on-year decline of 0.1% in May, with four consecutive months of negative growth [2]. - The actual GDP growth rate for the first half of the year is projected to be around 5.2%, with a target of 5% for the full year [4]. Future Outlook - Economic downward pressure persists, influenced by tariff fluctuations and weak domestic demand [5]. - The government may introduce additional policies to support key sectors and stabilize the economy, including potential monetary easing if external conditions worsen [6].

Market Performance - On July 2, 2025, A-shares experienced a decline, with the ChiNext Index dropping by 1.13%[2] - The Shanghai Composite Index fell by 0.09%, and the Shenzhen Component Index decreased by 0.61%[2] - The total market turnover was 13,767.27 billion yuan, a decrease of 890.78 billion yuan from the previous trading day[2] Stock Movement - Out of 5,296 stocks, 1,973 rose while 3,323 fell[2] - The best-performing sectors included steel (up 3.30%), coal (up 1.93%), and building materials (up 1.45%)[2] - The worst-performing sectors were comprehensive finance (down 3.92%), defense and military (down 2.12%), and electronics (down 1.91%)[2] Capital Flow - On July 2, 2025, the net outflow of main funds was 440.86 billion yuan, with large orders contributing to a net outflow of 235.11 billion yuan[3] - Small orders saw a continuous net inflow of 378.00 billion yuan[3] - Major ETFs like the Huaxia Shanghai 50 ETF and the Huatai-PB CSI 300 ETF saw significant decreases in trading volume, with changes of -0.69 billion yuan and -4.82 billion yuan respectively[3] Global Market Trends - On July 2, 2025, the Hang Seng Index rose by 0.62%, while the Nikkei 225 fell by 0.56%[4] - The Dow Jones Industrial Average increased by 0.91%, while the S&P 500 and Nasdaq Composite saw declines of 0.11% and 0.82% respectively[4] Risk Advisory - The report emphasizes that the data presented is for reference only and does not constitute investment advice[5]

Group 1 - The Central Economic Committee emphasized the need for a unified national market and high-quality development of the marine economy, highlighting the importance of coordination and cooperation to achieve these goals [1] - The meeting underscored that advancing Chinese-style modernization requires a focus on the marine economy, aiming to establish a path with Chinese characteristics [1] Group 2 - In June, new car manufacturers reported significant sales figures, with Hongmeng Zhixing delivering 52,747 vehicles, marking a historical high and securing the top position among new forces in car manufacturing [2] - Leap Motor also achieved a record high in new car deliveries for June, reaching 48,006 units, while Li Auto and Xpeng Motors followed closely [2] Group 3 - The People's Bank of China and six other departments released guidelines to enhance financial support for boosting and expanding consumption, emphasizing the importance of increasing residents' financial capacity to stimulate consumption [3] - Analysts noted that rising stock markets can enhance consumer willingness and ability to spend, as increased asset values create a psychological effect of wealth growth [3] Group 4 - China plans to issue 1.3 trillion yuan in ultra-long special bonds by 2025, with 5.55 billion yuan issued in the first half of the year, accounting for 42.69% of the annual quota [4] - The issuance plan for the second half of the year has been adjusted to be more intensive, with the first issuance scheduled for July 14 [4] Group 5 - In July, several Hong Kong stocks were favored by brokerages, with companies like Pop Mart, Hong Kong Exchanges, and others receiving multiple recommendations from different firms [5] - The technology and brokerage sectors are highlighted as areas of focus for institutional investors, especially with the upcoming mid-year report season [5] Group 6 - The banking sector has seen a continuous rise, with 36 listed banks in A-shares increasing by over 1%, and Suzhou Bank and Xiamen Bank showing notable gains [8] - Analysts attribute this upward trend to recent shareholder meetings focusing on dividends and strategic transformations, laying a foundation for future stock price increases [8] Group 7 - The international copper price surged, reaching a peak of $9,984, driven by market confidence stemming from the "Big and Beautiful" bill in the U.S. and inflation expectations [15] - Goldman Sachs raised its forecast for LME copper prices for the second half of 2025 from $9,140 per ton to $9,890 per ton, predicting a peak of $10,050 in August [15] Group 8 - BYD reported a 33.04% year-on-year increase in new energy vehicle sales for the first half of the year, totaling approximately 2.146 million units [21] - New and existing companies are expected to see significant profit growth, with projections indicating increases of 50%-100% for several firms in the upcoming half-year [21]

Funding and Policy Overview - The recent pause in the "National Subsidy" ("国补") program was due to the rapid consumption of subsidy funds, which outpaced the issuance of special government bonds[1] - A total of 1,380 billion yuan in central funds will be distributed in batches during the third and fourth quarters, focusing on the implementation of existing funds rather than increasing the 3,000 billion yuan quota[1][4] - As of the end of May, approximately 1,620 billion yuan of the subsidy funds had been allocated, with over half of the expected funds consumed in the first five months[2][3] Impact on Consumer Spending - The "trade-in" subsidy program has significantly boosted retail sales, with May's total retail sales exceeding the trend value by approximately 2.8 percentage points[5] - The year-on-year growth rate for "trade-in" categories in May reached 16.6%, compared to an overall retail sales growth of 8.2%[5][6] - However, due to the rapid consumption of subsidy funds, the growth rate of retail sales may experience downward fluctuations in the coming months[5] Future Considerations - The "trade-in" policy needs to be strengthened in terms of quantity to prevent a decline in consumer momentum, as non-"trade-in" categories only saw a year-on-year growth of 1.6% in May[6] - There is a need for further improvement in policy mechanisms to reduce unfair competition caused by differences in subsidy standards and regional disparities[6] - Risks include potential policy shortcomings, unexpected changes in the domestic economic situation, and fluctuations in exports[6]