Core Viewpoint - Since 2020, productive credit (excluding real estate and infrastructure loans) has been continuously increasing, while terminal demand credit (related to real estate and infrastructure) has been declining, indicating that credit support is more reflected on the supply side rather than the demand side [2][4][5] Group 1: Productive Credit Needs to Decline - A clear definition is established: terminal demand credit includes infrastructure loans, real estate loans, and consumer loans, while productive credit includes business loans and non-real estate infrastructure loans [4][13] - Data observation shows that since 2020, the growth of productive credit has significantly outpaced that of terminal demand credit, with productive credit increasing by 4.8 trillion compared to a decrease of 4.9 trillion in terminal demand credit from 2019 to 2024 [4][13] - The excessive increase in productive credit may exacerbate supply-demand contradictions, where productive investment serves as both current demand and future supply [4][15] Group 2: Weekly Economic Observation - The Huachuang Macro WEI index as of September 7, 2025, is at 6.93%, up 0.17 points from the previous week, indicating a recovery in economic activity driven mainly by infrastructure and durable goods consumption [6][17] - Infrastructure indicators such as asphalt plant operating rates and cement shipment rates have improved compared to last year, with asphalt plant operating rates at 34.9%, up 9% year-on-year [7][26] - Real estate sales have shown a significant increase, with a 16.6% year-on-year growth in residential sales in 67 cities during the first five days of September [8][24] Group 3: Price Trends - Prices of gold, oil, and copper have risen, with COMEX gold at $3646.3 per ounce, up 1.3%, and LME copper at $10068 per ton, up 1.2% [8][44] - Domestic commodity prices have remained stable, while overseas prices have increased, indicating a divergence in price trends [8][44] Group 4: Interest Rates and Debt - The yield on government bonds has shown an upward trend, with the 10-year government bond yield at 1.8670%, reflecting a steepening yield curve [8][65] - The government has planned to issue new local government bonds amounting to 118.5 billion, indicating a proactive fiscal policy approach [8][49]

Core Viewpoint - The article discusses the current economic trends in China, highlighting both positive and negative indicators in various sectors, including real estate, trade, and commodity prices, while also addressing the implications of recent legal rulings on tariffs and local government debt issuance. Group 1: Economic Indicators - The Huachuang Macro WEI index has decreased to 6.16% as of August 24, down from 7.14% on August 17, indicating a high-level retreat in economic activity [8] - The sales decline in commercial housing has narrowed, with a reported decrease of -14% in the first 29 days of August compared to -22% in July [12] - The container throughput at Chinese ports has shown a year-on-year increase of 5.9% over the past four weeks, with a slight week-on-week increase of 0.3% [22] Group 2: Consumer Behavior - Retail sales of passenger vehicles have slowed, with a growth rate of +6% as of August 24, down from +8% previously [14] - The land premium rate has decreased to 1.62% as of August 24, compared to 6.5% in July, indicating a cooling in the real estate market [12] Group 3: Production Trends - The operating rate of oil asphalt plants has declined for two consecutive weeks, currently at 29.3%, down 1.4% from the previous week [17] - Industrial production indicators show a mixed performance, with coal throughput at Qinhuangdao port increasing by 7.3% year-on-year, but overall industrial production remains weak [20] Group 4: Trade Developments - The recent legal ruling on U.S. tariffs has deemed most global tariff policies illegal, which may impact trade dynamics between the U.S. and China [4] - The number of container ships from China to the U.S. has significantly decreased, with a year-on-year drop of 33.3% in the number of ships [23] Group 5: Commodity Prices - Prices for gold, oil, and copper have risen, with gold reaching $3,475.5 per ounce, up 3%, and oil prices increasing by 0.5% for WTI and 0.6% for Brent [34] - Conversely, prices for "anti-involution" commodities such as coal and steel have declined, with Shanxi thermal coal prices dropping by 2% [35] Group 6: Debt and Interest Rates - The issuance of special bonds has reached 74.6% of the annual target, which is better than in previous years [4] - Long-term interest rates have shown slight adjustments, with the 10-year government bond yield at 1.8379%, reflecting a change of +5.61 basis points from the previous week [57]

Group 1 - The Huachuang Macro WEI index has risen above 7%, reaching 7.14% as of August 17, up from 6.52% the previous week, indicating a recovery in economic activity driven mainly by infrastructure and durable goods consumption [2][10][11] - Retail sales of passenger vehicles have rebounded, with a year-on-year increase of 8% as of August 17, compared to a previous decline of 4% [2][15] - The land premium rate has rebounded to 10.3% as of August 17, compared to 6.5% in July, indicating a positive trend in the real estate market [2][16] Group 2 - The number of cargo container ships from China to the U.S. has decreased significantly, with a year-on-year decline of 22.7% as of August 23, compared to an average decline of 5.8% in July [4][29] - Prices of "anti-involution" commodities have weakened, with lithium carbonate experiencing the largest drop of 8.9% [4][45] - The U.S. and EU have reached an agreement on a trade framework, imposing a 15% tariff on most EU goods imported into the U.S., while certain natural resources and pharmaceuticals are exempt [4][29] Group 3 - The issuance of special bonds has accelerated, with a total of 3.26 trillion yuan issued, representing 74.2% of the planned issuance, which is faster than in 2020-2021 but slower than in 2022 [5][49] - The yields on government bonds have increased, with the 1-year, 5-year, and 10-year yields reported at 1.3665%, 1.5948%, and 1.7465%, respectively, reflecting a rise from the previous week [5][65] Group 4 - The average daily subway ridership in 27 cities has increased by 2.2% year-on-year, reaching 81.08 million passengers in the first three weeks of August [2][15] - The construction-related indicators, such as asphalt operating rates and cement dispatch rates, have shown improvement compared to last year [2][19] - The overall industrial production remains stable, with coal throughput at Qinhuangdao port showing a year-on-year increase of 11.2% [2][20]

Economic Indicators - The Huachuang WEI index rose to 7.14% as of August 17, 2025, up from 6.52% the previous week, marking an increase of 0.62 percentage points[1] - Retail sales of passenger vehicles increased by 8% year-on-year as of August 17, 2025, compared to a previous decline of 4%[1] - The land premium rate rebounded to 10.3% as of August 17, 2025, with a two-week average of 6%[1] Trade and Consumption - Container throughput at Chinese ports maintained a high level, with a four-week cumulative year-on-year increase of 5% as of August 17, 2025[1] - The number of cargo container ships from China to the U.S. decreased by 22.7% year-on-year as of August 23, 2025, compared to an average decline of 5.8% in July[2] - The average daily subway ridership in 27 cities increased by 2.2% year-on-year in the first three weeks of August 2025[1] Commodity Prices - Gold prices rose to $3,373.6 per ounce, an increase of 1.1%, while U.S. oil prices reached $63.7 per barrel, up 1.4%[2] - Lithium carbonate futures fell by 8.9%, marking the largest decline among "anti-involution" commodities[2] Debt and Interest Rates - New special bond issuance reached 3.26 trillion yuan, with a progress rate of 74.2% as of August 25, 2025[3] - The yield on 1-year, 5-year, and 10-year government bonds was reported at 1.3665%, 1.5948%, and 1.7465%, respectively, with increases of 1.59bps, 4.94bps, and 5.74bps compared to August 8, 2025[3]

Core Viewpoint - The significant divergence between the stock-bond Sharpe ratio and price trends indicates a notable recovery in the attractiveness of equities compared to bonds, although the price response has been lagging [2][6][22]. Group 1: Key Indicators - Over the past two years, equity assets have underperformed compared to bond assets, with the ten-year government bond yield hitting record lows while the dividend yield of the Wande All A index has reached new highs [6][14]. - The decline in the equity-bond yield spread suggests a growing preference for bond assets, as investors demand higher dividend returns from equity assets [6][14]. - The underperformance of equity assets is attributed to their higher volatility and drawdown compared to bonds, leading to a preference for lower-risk bond investments [6][19]. Group 2: Underlying Logic - The recovery in the stock-bond Sharpe ratio is primarily driven by policy measures that have mitigated risks, limiting downward expressions in the stock market and reducing volatility [3][8][26]. - Economic indicators, such as the scissors difference between corporate and household deposits, have shown signs of recovery since September 2024, suggesting that profit growth may be nearing its bottom [3][9][26]. Group 3: Investment Insights - The "highlight moment" for equities may occur earlier than expected, as the current environment shows a significant increase in the stock Sharpe ratio despite economic bottoming [4][10]. - The relationship between stocks and bonds in China is shifting towards favoring equities, with expectations that bonds may decline while stocks rise [4][11][30]. - Given the macroeconomic conditions, there is a need to emphasize the allocation value of equities compared to bonds [4][11].