Group 1 - The core focus of global financial markets this week is the US inflation data for May, which will provide insights into the impact of tariffs on prices and influence the Federal Reserve's interest rate decisions [1][2] - The market expects the May Consumer Price Index (CPI) data to reflect the price pressures from tariffs, particularly in core categories such as clothing, household goods, and new cars [2][3] - The upcoming week will also see the release of the Producer Price Index (PPI) and weekly initial jobless claims in the US, amidst mixed signals from recent economic data [3][10] Group 2 - In Europe, the focus will be on the Eurozone's industrial production and trade data for April to assess the economic impact of tariffs [6][7] - France and Spain will release their final CPI data for May on Friday, contributing to the overall understanding of inflation trends in the region [8] - The UK will publish significant data including employment figures, GDP, industrial production, and trade data, with expectations of a 0.2% contraction in April due to the effects of US tariffs on manufacturing [9][10] Group 3 - In Asia, Japan is expected to confirm a 0.7% contraction in its first-quarter GDP, indicating a risk of technical recession, alongside other economic indicators [10] - China's inflation and trade data for May will be released, with expectations of further declines in CPI and PPI, highlighting weak domestic demand and deflation risks [10][11] - Overall, global markets will closely monitor key economic data, especially US inflation figures, and their implications for Federal Reserve policy, while evaluating the ongoing impact of trade tensions on global economic growth and inflation trajectories [11]

Core Viewpoint - The European Central Bank (ECB) has not identified any risks of deflation in the current economic environment [1] Group 1 - ECB Governing Council member and Bank of France Governor Villeroy stated that there are no signs of deflation risks [1]

Group 1 - In March, China's exports surged unexpectedly, with a year-on-year growth of 12.4%, significantly exceeding the anticipated 4% increase, driven by exporters rushing to ship goods before new U.S. tariffs took effect [2][3] - The trade surplus for March reached $102.6 billion, indicating a strong export performance, but also reflecting exporters' fears of high tariffs imposed by the U.S. [2][3] - The ongoing decline in commodity prices poses a significant challenge to the macroeconomic environment, potentially compressing corporate profits and affecting employee incomes [4][5] Group 2 - The economic landscape is characterized by cautious consumer behavior, exacerbated by rising household savings and a downturn in the real estate sector, leading to reduced consumption [6][7] - The U.S. tariffs on Chinese exports are expected to severely impact export growth, which has been a crucial driver of China's economic growth, accounting for nearly one-third of GDP last year [9][11] - The potential decline in exports could lead to significant job losses, with estimates suggesting that up to 20 million workers may be affected due to the high tariffs [17][19] Group 3 - The current economic situation necessitates a shift towards stimulating domestic consumption, which remains low compared to other major economies, with only 39% of GDP coming from consumer spending [13][18] - Long-term solutions involve transitioning towards a consumption-driven economy, requiring structural changes such as enhancing social security systems and balancing labor wages with corporate profits [19][20] - The need for diversification in trade partnerships is emphasized to mitigate risks associated with reliance on the U.S. market, suggesting a strategic pivot towards non-U.S. trade relationships [17][19]

Investment Rating - The report indicates a positive outlook for the industry, suggesting a focus on potential investment opportunities following the "Two Sessions" policy signals [3]. Core Insights - The manufacturing sector has returned to an expansion phase, with a PMI of 50.2 in February 2025, indicating improved production and new orders [8]. - The construction industry has shown significant improvement, with a PMI of 52.7 in February 2025, driven by post-holiday resumption of work and supportive fiscal policies [13]. - There has been a notable increase in corporate credit demand, with new RMB loans reaching 4.78 trillion yuan in January 2025, reflecting a recovery in the real economy [16]. - The government work report highlights a commitment to maintaining a GDP growth target of around 5% for 2025, alongside a historic high fiscal deficit rate of 4% [27][28]. Summary by Sections 1. Manufacturing Sector Recovery - The manufacturing PMI rose to 50.2 in February 2025, with production and new orders indices at 52.5 and 51.1 respectively, indicating a return to expansion [8]. - Export orders have improved, with a new export orders index at 48.6, suggesting better-than-expected export performance despite tariff impacts [8]. 2. Significant Growth in Corporate Credit - In January 2025, the new social financing scale reached 7.06 trillion yuan, with new RMB loans contributing significantly to this growth [16]. - The increase in corporate credit demand is attributed to enhanced confidence in the economy and supportive government policies [23]. 3. Government Work Report Highlights - The report sets a GDP growth target of 5% for 2025, maintaining consistency with previous years [27]. - The fiscal deficit rate is set to rise to 4% in 2025, reflecting a strong commitment to fiscal expansion [28]. - The government plans to increase the special bond quota to 4.4 trillion yuan in 2025, with a focus on infrastructure and debt resolution [29].