Economic Policy Insights - Recent policy discussions indicate that there is no strong demand for additional stimulus measures, as highlighted in the September 22 press conference and the September 26 monetary policy meeting[2][4]. - The pressure to achieve the annual GDP growth target of 5% in Q4 is relatively low, with only a 4.6% growth needed to meet this target[6][11]. - Despite high base pressures on consumption and exports, the internal economic resilience suggests that the necessity for new policies remains low[11][16]. Fiscal and Monetary Policy Adjustments - The focus will likely shift towards optimizing existing policies rather than introducing new ones, with adjustments in the form, rhythm, and purpose of current policies to support economic growth[17][18]. - Local government fiscal pressures have eased, with special bonds issued reaching 1.2 trillion yuan, exceeding the initial 800 billion yuan target, reducing the need for central government funding[7][11]. - The new policy financial tools launched at the end of September align with market expectations, indicating a potential shift in market dynamics if unexpected stimulus measures are introduced[4][19]. Consumption and Economic Growth - Consumer spending is expected to support GDP growth despite challenges, with service consumption projected to grow by 7.4% in 2024, compared to a 3.6% increase in goods consumption[11][12]. - The recent National Day holiday saw a 4.5% year-on-year increase in daily sales revenue across the consumption sector, indicating ongoing consumer resilience[11][12]. Reform and Long-term Strategy - Current policy focus is on deepening reforms rather than immediate economic stimulus, with significant reforms in market unification and fiscal systems underway[21][22]. - The emphasis on long-term goals over short-term targets suggests a strategic shift in policy direction, aiming to enhance overall growth rates and unlock potential economic growth spaces[22].

Core Insights - The "924" policy has marked a significant shift in China's economic policy from "prudent" to "moderately loose" [1][6] - The implementation of the "924" policy has not only provided a series of incremental policies for short-term growth stabilization but also reflects a change in economic policy thinking [2][7] - New incremental policies are expected to be more targeted, addressing unresolved issues from previous policies [4][10] Policy Overview - The "924" policy, initiated on September 24, 2024, included measures such as reserve requirement ratio cuts, interest rate reductions, debt management, and innovative monetary policy tools aimed at stabilizing growth, promoting consumption, and supporting the real estate and stock markets [2][5] - The macroeconomic policy direction has shifted, with a focus on repairing balance sheets across various sectors and alleviating the pains of economic transition [3][8] Economic Impact - Following the "924" policy, the Shanghai Composite Index rose over 1000 points, indicating positive market sentiment and recovery in consumption and investment [2][4] - By the end of 2024, GDP growth rebounded to 5.4% in the fourth quarter, supported by increased retail sales and fixed asset investment [6][7] Future Considerations - As of late 2025, economic indicators show signs of slowing growth, prompting speculation about the introduction of a new round of "924" policies [10][11] - Experts suggest that future policies should focus on targeted interventions to address ongoing challenges in the real estate market and enhance coordination between monetary and fiscal policies [4][12] - Recommendations for future policies include expanding service consumption subsidies, reinitiating policy financial tools for local projects, and fully lifting purchase restrictions in first-tier cities [11][12]

Core Viewpoint - The article discusses the potential for a new round of "924" policies in response to slowing consumption and investment growth, as well as increased volatility in real estate prices in certain cities as of the second half of 2025 [1][7]. Group 1: Review of "924" Policy - The "924" policy, introduced on September 24, 2024, marked a significant shift in China's economic policy from "prudent" to "moderately loose" [3][9]. - The policy included a series of measures such as interest rate cuts, reserve requirement ratio reductions, and innovative monetary policy tools aimed at stabilizing growth, promoting consumption, and restoring property and stock market stability [5][12]. - The implementation of the "924" policy led to a notable increase in the Shanghai Composite Index, which rose over 1,000 points within a year [4][5]. Group 2: Economic Conditions and Challenges - By the second half of 2025, consumption and investment growth began to slow, with some cities experiencing increased fluctuations in real estate prices, prompting questions about the need for new policies [7][17]. - Economic indicators showed a decline in retail sales growth to 3.4% year-on-year in August 2025, and fixed asset investment growth was only 0.5% for the first eight months of the year, with real estate investment down by 12.9% [16][17]. - The challenges faced include the diminishing marginal effects of previous policies and the need for more targeted measures to address unresolved issues from earlier interventions [17][18]. Group 3: Future Policy Directions - Experts suggest that new incremental policies will likely be introduced, with a focus on addressing specific economic challenges rather than replicating the "924" policy [18][19]. - Recommendations for future policies include expanding subsidies for service consumption, directly providing cash or digital currency to low-income groups, and reinitiating policy financial tools to support local project capital [18][19]. - There is a call for a more coordinated approach between monetary and fiscal policies to enhance the effectiveness of future interventions and improve the overall economic environment [19].

Report Summary 1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report The economic repair momentum is weakening, and incremental policies are urgently needed. The latest economic data shows that the economic growth momentum continues to slow down, with fixed - asset investment, manufacturing, and infrastructure investment declining, and real - estate investment still having double - digit declines. Consumption repair is unstable, and deflation pressure persists. The economic fundamentals are still weak, and incremental policies need to be quickly implemented to address multiple constraints such as investment, consumption, and debt resolution risks [6][34]. 3. Summary by Directory 3.1 Fiscal Revenue Growth Improves Continuously, Tax Revenue Increases Slightly - General public budget revenue growth rate continues to rise, with local fiscal revenue being the main contributor and the drag from central fiscal revenue weakening. From January to August, the year - on - year growth rate of general public budget revenue reached 0.3%, 0.2 percentage points higher than the previous value, exceeding the annual budget target by 0.1%. The central fiscal revenue has been improving, with the decline narrowing for 6 consecutive months, while local fiscal revenue has maintained positive growth. However, the revenue completion progress is slow [12]. - Tax revenue turns to a slight increase, and non - tax revenue continues to shrink. From January to August, the cumulative growth rate of tax revenue turned positive to 0.02%, rising for 6 consecutive months. Securities trading stamp duty contributes significantly, while consumption tax, real - estate tax, and foreign - trade tax are still drags. The growth rate of non - tax revenue dropped to 1.5%, declining for 6 consecutive months [17]. 3.2 Fiscal Expenditure Growth Declines, Infrastructure Expenditure Growth Declines Significantly - Fiscal expenditure growth has declined across the board, with both central and local expenditures hitting new lows this year. From January to August, the year - on - year growth rate of general public budget expenditure was 3.1%, with the increase narrowing by 0.3 percentage points. The expenditure rhythm is the lowest in the same period in the past five years. The growth rate of central expenditure is still relatively high but has declined by 0.8 percentage points from the previous month, while local expenditure growth has declined for 4 consecutive months, mainly affected by factors such as the decline in land transfer income [22]. - In terms of expenditure structure, people's livelihood expenditure has slowed down from a high level, and infrastructure expenditure has shrunk significantly. The growth rate of social security and employment expenditure has slightly increased, while the growth rates of education and health - care expenditure have slightly decreased. The growth rate declines of infrastructure - related expenditures such as agriculture, forestry, and water affairs and urban - rural community affairs have expanded [26]. 3.3 Government - Fund Revenue and Expenditure Growth Slows, Special Bond Issuance Speeds Up but Remains Slow - Government - fund revenue and expenditure growth is weak. The revenue side is under continuous pressure, with the year - on - year growth rate of government - fund revenue from January to August being - 1.4%, and the decline expanding. The expenditure side growth rate has marginally declined. The revenue growth rate is significantly lower than the expenditure growth rate, and the "mismatch" between revenue and expenditure progress highlights the debt - resolution pressure [28]. - Local government special bond issuance has accelerated but remains slow. From January to August, the completion progress of new special bonds was about 74.2%, an increase of about 11 percentage points from the previous value, but still 15 percentage points lower than the average in the same period from 2022 - 2024. The slow issuance is mainly restricted by debt resolution and tightened access to projects [28]. 3.4 Incremental Policies Are Approaching The economic repair momentum is weakening, and incremental policies are urgently needed to be stepped up. The economic growth momentum continues to slow down, consumption repair is unstable, and the economic fundamentals are still weak. Incremental policies need to be quickly implemented to address multiple constraints [6][34].

Core Viewpoint - The article discusses the implications of the recent US Federal Reserve interest rate cut and its impact on the Chinese yuan, particularly in the context of US-China negotiations, suggesting that currency exchange rates are a significant focus of these discussions [1][4][8]. Group 1: Currency and Policy Implications - The yuan is approaching 7.1, indicating that exchange rates are a key topic in US-China negotiations, with the US aiming for yuan appreciation to attract capital back to the US [8][9]. - The article suggests that both countries have a mutual interest in a gradual appreciation of the yuan to support domestic demand recovery in China [9][10]. - The Federal Reserve's interest rate cut is seen as a catalyst for potential changes in domestic policies in China, with expectations of new growth-stimulating measures following the Fed's actions [21][28]. Group 2: Domestic Policy and Economic Strategy - Following the US-China negotiations, China announced policies to expand service consumption, indicating a strategic response to the current economic climate [15][21]. - The article emphasizes that any domestic interest rate cuts in China will depend on the extent of the Fed's rate cuts, with a potential follow-up of 10 basis points if the Fed cuts by 50 basis points [29][30]. - The discussion includes the importance of a coordinated monetary policy approach, suggesting that domestic rate cuts may serve to manage cross-border capital flows rather than purely stimulate the economy [18][29]. Group 3: Market Dynamics and Future Outlook - The article highlights the potential for significant policy changes that could impact the market, particularly with the introduction of market-oriented reforms that may create new investment opportunities [26][27]. - It notes that the current market dynamics are influenced by a shift towards cyclical sectors, which may change as new policies are implemented [22][36]. - The article concludes with a focus on the importance of long-term decision-making in the face of short-term market volatility, emphasizing the ongoing easing cycle and the potential for increased domestic policy support [36][37].

Summary of Conference Call Notes Industry Overview - The conference call primarily discusses the bond market and its pricing dynamics, highlighting the differences in the current economic environment compared to the previous year [1][4][5]. Key Points and Arguments 1. **Policy Context**: The policy environment on September 22, 2025, differs from September 24, 2024, due to changes in deflation expectations, global financial conditions, and economic growth targets, leading to an expectation of no significant incremental policies [1][4]. 2. **Market Divergence**: The bond market is characterized by a lack of consensus among accounts based on risk preferences. Low-risk accounts focus on interest rate cuts and allocation opportunities, while high-risk accounts are more concerned with potential market risks [1][7]. 3. **Market Status**: The current market is in a state of fluctuation without a clear bull or bear trend, as there is no significant inflow of funds or negative feedback from asset management [1][9]. 4. **Investment Opportunities**: Three short-term investment opportunities are identified: - Steepening of the yield curve, contingent on institutional capabilities in managing long-term positions [10]. - Relative value recovery of national development bonds, limited to the short term [11]. - Secondary market value drop for 3 to 5-year bonds, provided redemption risks are covered [11][13]. 5. **Interest Rate Adjustments**: Recent changes in the 14-day operation interest rates aim to smooth the short-end curve, with a target range of 1.45% to 1.5% [12]. 6. **Liquidity Focus**: The upcoming quarter-end fiscal injections are crucial, as they will provide a stable environment for bank liabilities, suggesting a strategy of holding bonds through the holiday period [14][15]. Additional Important Content - **Market Influencing Factors**: The bond market is influenced by both fundamental economic data and institutional behaviors, with weak economic performance and expectations of central bank actions being significant drivers [3]. - **Expectations from Upcoming Meetings**: The upcoming meetings are expected to focus on the achievements of financial services to the real economy, support for capital market development, and the progress of RMB internationalization, with no major new policies anticipated [6]. - **Risk Management**: Different institutions have varying perspectives on market trends based on their liability stability, affecting their investment strategies [8]. This summary encapsulates the essential insights from the conference call, providing a comprehensive overview of the current bond market dynamics and strategic considerations for investors.

Economic Growth Overview - In August, China's economic growth momentum slowed down, with both supply and demand sides experiencing a decline in growth rates. Analysts suggest that due to high base effects and tariff uncertainties, along with the waning effects of the "trade-in" policy, downward pressure on the domestic economy is expected to increase in the fourth quarter, necessitating new policies to stabilize investment and promote consumption to achieve the annual growth target of around 5% [1][11]. Production Sector Analysis - In August, the industrial added value for large-scale enterprises grew by 5.2% year-on-year, a decrease of 0.5 percentage points from the previous month. The service production index growth rate was 5.6%, down 0.2 percentage points from the previous month [1]. - The "anti-involution" policy is identified as a primary reason for the cooling of industrial production. The industrial production intensity has declined for two consecutive months, influenced by extreme weather and the effects of the "anti-involution" policy [2]. - The added value of upstream production sectors showed strong performance, with non-ferrous metal smelting and rolling industries growing by 9.1% year-on-year, while coal mining and washing industries grew by 5.1% [2]. Demand Side Insights - In August, the total retail sales of consumer goods and exports in USD grew by 3.4% and 4.4% year-on-year, respectively, both showing declines from the previous month [3]. - The retail sales growth rate has been declining for three consecutive months, primarily due to the diminishing effects of the "trade-in" policy. The largest month-on-month declines were seen in home appliances and communication equipment, with decreases of 14.4% and 7.6% respectively [3][5]. Investment Trends - Investment growth has slowed for five consecutive months, with real estate, infrastructure, and manufacturing investments all experiencing varying degrees of decline [6]. - Infrastructure investment growth fell to 2.0% year-on-year for the first eight months, a decrease of 1.2 percentage points from the previous month. Manufacturing investment growth dropped to 5.1%, the lowest level since early 2021 [9]. - Analysts indicate that the decline in manufacturing investment is influenced by extreme weather and rising global trade uncertainties, which suppress the willingness of downstream enterprises to expand production [7]. Policy Recommendations - Analysts suggest that maintaining stable economic growth is becoming increasingly challenging, and timely policy adjustments are necessary. The potential for new incremental policies is anticipated, possibly by the end of September, including new policy financial tools and early allocation of local government debt quotas to improve infrastructure investment [12].

Profit and Revenue Analysis - From January to July 2025, the total profit of industrial enterprises reached CNY 40,203.5 billion, a year-on-year decrease of 1.7%, with the decline narrowing by 0.1 percentage points compared to the first half of the year[1] - In July 2025, industrial enterprises' profits fell by 1.5% year-on-year, with the decline narrowing by 2.8 percentage points from June[1] - The operating income of industrial enterprises grew by 2.3% year-on-year from January to July, with the growth rate slowing by 0.2 percentage points compared to the first half of the year[1] Cost and Profitability Metrics - The operating income profit margin for industrial enterprises was 5.2% from January to July, unchanged from the first half of the year[2] - Operating costs increased by 2.5% year-on-year during the same period, with the growth rate slowing by 0.3 percentage points compared to the first half[1] - The average revenue per CNY 100 of assets was CNY 74.0, an increase of CNY 0.1 from the first half of the year[1] Industry Performance Insights - The mining industry accounted for 12.3% of total industrial profits, continuing to decline, with profits in this sector dropping by 31.6% year-on-year[9] - High-tech manufacturing contributed positively to the profit growth of industrial enterprises, adding 1.9 percentage points to the cumulative year-on-year profit growth[11] - The overall industrial production value increased by 6.3% year-on-year, slightly slowing by 0.1 percentage points compared to the first half of the year[6] Future Policy Expectations - There are expectations for incremental policies in the fourth quarter to address the weak pricing environment affecting industrial profitability[18] - The negative contribution from the mining and raw materials processing industries to profit growth is anticipated to continue, while traditional and high-tech manufacturing sectors provide some support[18]

Core Viewpoint - Experts predict that the dual push of ultra-long special government bonds and local government special bonds will significantly stimulate investment, providing momentum for expanding domestic demand and stabilizing growth [1] Group 1: Investment Opportunities - In the fourth quarter, relevant departments are expected to timely introduce incremental policies based on changing circumstances [1] - Local government special bond funds supporting infrastructure and real estate projects are likely to be densely deployed in the next phase [1] - Long-term, new infrastructure sectors such as data centers and charging piles are expected to become new growth drivers, with a more considerable investment scale compared to traditional infrastructure [1]

Group 1 - The article highlights the acceleration of government bond issuance and usage in China, with a focus on special long-term bonds and local government bonds, which are expected to support economic growth [1][2][3] - As of August 26, 2023, the issuance of special long-term bonds reached 996 billion yuan, with a progress rate of 76.6%, and local government special bonds issued totaled 31,497.6 billion yuan, representing a 40% increase compared to the same period last year [1][2] - The government plans to issue 1.3 trillion yuan of special long-term bonds in 2025, an increase of 300 billion yuan from 2024, focusing on key areas such as infrastructure and new technologies [1][3] Group 2 - The funds from local government special bonds are increasingly directed towards various sectors, with 28.2% allocated to municipal and industrial park infrastructure, 18.8% to transportation infrastructure, and 12.9% to land reserves [3][4] - The use of special bonds for land reserves is expected to stimulate an additional 1 trillion yuan in fixed asset investments in real estate and infrastructure [3][4] - The expansion of the investment scope for local government special bonds is anticipated to enhance the effectiveness of government investment guidance funds [4][5] Group 3 - Experts predict that the combined efforts of special long-term bonds and local government special bonds will significantly boost investment, providing momentum for domestic demand and economic stability [5] - In the fourth quarter, it is expected that relevant departments will introduce incremental policies in response to changing circumstances, including the potential issuance of additional special bonds [5]