Core Viewpoint - The Fourth Plenary Session of the 20th Central Committee of the Communist Party of China outlined the "15th Five-Year Plan" for economic and social development, emphasizing the importance of achieving socialist modernization by 2035, with a key indicator being per capita GDP reaching the level of moderately developed countries [1] Economic Growth and Productivity - The "15th Five-Year Plan" aims for economic growth to remain within a reasonable range, with steady improvements in total factor productivity and synchronized growth of residents' income and economic growth [1] - The potential economic growth rate for China is estimated to be around 4.7% from 2026 to 2030, with contributions from capital formation at 2.7 percentage points and total factor productivity at 2.0 percentage points [8] - To achieve the goal of per capita GDP reaching the level of moderately developed countries by 2035, an annual GDP growth rate of approximately 4.7% is required during the "15th Five-Year Plan" period [8] Macroeconomic Policies - The plan emphasizes the need for proactive macroeconomic policies, including active fiscal policies and moderately loose monetary policies, to stabilize growth, employment, and expectations [9] - Fiscal spending should outpace nominal economic growth, focusing on improving the efficiency of fund usage and ensuring social welfare [9] - Monetary policy should ensure real interest rates decline and maintain ample liquidity, with structural monetary tools supporting key sectors [10] Domestic Demand and Consumption - The "15th Five-Year Plan" stresses the importance of expanding domestic demand and enhancing consumption as a key driver of economic growth [11] - To boost consumption, it is essential to address issues related to consumer confidence, capability, and willingness, including improving social security and income distribution [12] - Significant investment opportunities exist in public services and infrastructure, particularly in sectors like technology, education, and healthcare, which can create more consumption scenarios [13] Industrial and Technological Development - The plan prioritizes the construction of a modern industrial system and high-level technological self-reliance, focusing on enhancing the integrity, advancement, and security of the industrial system [16] - Emphasis is placed on promoting innovation through improved support for research and development, enhancing the collaboration between industry and academia, and optimizing the allocation of resources [15][16] - The need to address "involution" in competition, characterized by price wars and cost-cutting measures, is highlighted, with calls for regulatory improvements and market mechanism enhancements [14][15]

Group 1: Report Industry Investment Rating - No relevant content provided Group 2: Core Views of the Report - The "15th Five-Year Plan" Proposal reaffirms "taking economic development as the center" and aims to empower the real economy with technology and lead the construction of a modern industrial system [2][5][11] - Keywords such as "innovation", "technology", "consumption", and "investment" become prominent, reflecting the focus on technological innovation, domestic demand expansion, and investment efficiency [3][5][13] - The total target is to improve total factor productivity and keep economic growth within a reasonable range, implying an expected annual average economic growth rate of 3.7% - 5.4% in the next 10 years [4][5][18] - The industrial structure should maintain a reasonable proportion of the manufacturing industry and significantly increase the household consumption rate, which will be important guidelines for economic structure adjustment [5][22][24] Group 3: Summary by Relevant Catalog 1.1 General Overview: Taking Economic Development as the Center and Modern Industrial System as the Core Task - The "15th Five-Year Plan" Proposal reaffirms the principle of "taking economic development as the center", with the external environment becoming more complex and domestic challenges remaining in new and old kinetic energy conversion and effective demand [11] - It emphasizes seizing the opportunities of the new round of technological revolution and industrial transformation, and proposes specific goals for industrial development, such as optimizing traditional industries and cultivating emerging and future industries [11] 1.2 Word Frequency: Innovation, Technology, Consumption, and Investment Become Keywords - "Innovation" and "technology" appear 61 and 46 times respectively, with more refined key core technology research goals and an emphasis on technological transformation [13] - The frequency of "consumption" - related words rises to 23, and specific measures are proposed to boost consumption, indicating more consumption - promoting policies in the future [14] - The frequency of "investment" - related words reaches 29, suggesting that government investment may be more inclined to high - efficiency areas and the optimization of investment structure [15] - The frequency of "trade" - related words increases to 22, emphasizing the expansion of independent opening - up and the promotion of RMB internationalization [15] 1.3 Total Target: Improving "Total Factor Productivity" and Keeping Economic Growth within a Reasonable Range - The "15th Five - Year Plan" and the 2035 target imply an expected annual average economic growth rate of 3.7% - 5.4% in the next 10 years, providing a basis for judging the annual economic growth target [18] - The Proposal aims to steadily increase total factor productivity. Considering the structural constraints of the Chinese economy in the next decade, achieving high - quality growth requires continuous improvement of total factor productivity and release of institutional dividends [20] 1.4 Industrial Structure: Maintaining a Reasonable Proportion of the Manufacturing Industry and Significantly Increasing the Household Consumption Rate - The goal of maintaining a reasonable proportion of the manufacturing industry implies the need to upgrade traditional manufacturing and adhere to the real economy. The high - tech industry has become a strong growth driver [22] - The new goal of significantly increasing the household consumption rate is proposed. China's current household consumption rate has great room for improvement, and measures such as promoting employment and increasing income are proposed to boost consumption [24]

Core Insights - Joel Mokyr, along with Philippe Aghion and Peter Howitt, was awarded the 2025 Nobel Prize in Economic Sciences for their contributions to the theory of innovation-driven economic growth, with Mokyr receiving half of the prize for revealing the prerequisites for sustained growth through technological advancement [1][3]. Group 1: Innovation and Economic Growth - The core premise for sustained economic growth is "useful knowledge," which consists of prescriptive knowledge (how to operate technology) and propositional knowledge (understanding the scientific principles behind technology) [4][5]. - The Industrial Revolution marked the first strong feedback loop between these two types of knowledge, laying the foundation for modern economic growth [5]. Group 2: Importance of Understanding Principles - Understanding the principles behind technology is crucial for sustainable innovation; merely knowing how to do something is insufficient [6][8]. - Historical examples, such as the development of agricultural practices and steam engines, illustrate that scientific understanding leads to significant advancements and efficiency improvements [7][8]. Group 3: Measurement of Productivity - Current economic growth rates may not accurately reflect productivity due to outdated measurement methods that fail to account for non-market goods and services that enhance human welfare, such as vaccines [9]. - There is a need for new methods to measure productivity that align with modern economies focused on information and advanced services [9]. Group 4: Openness and Collaboration - For an economy to thrive, it must remain open to trade, talent, and knowledge exchange, emphasizing the importance of a free market for ideas and knowledge [10]. - Collaboration between the public and private sectors is essential for fostering innovation, with the balance depending on industry characteristics [10]. Group 5: China's Investment in Education and Infrastructure - China's significant investments in infrastructure and higher education are expected to yield substantial returns for its economy [11]. - The relationship between state-owned and private enterprises needs to be recalibrated to foster innovation effectively [11]. Group 6: Historical Perspective on Economic Progress - Economic history provides valuable insights into the progress made over time, highlighting that current living standards are unprecedented compared to historical norms [14][15]. - Understanding economic history is essential for comprehending modern economic systems and challenges [14]. Group 7: Lifelong Learning - Young individuals are encouraged to maintain a habit of lifelong learning to adapt to the rapidly changing world, as knowledge becomes outdated quickly [16][17].

Group 1 - The "15th Five-Year Plan" proposes three important quantitative indicators for economic development: steady improvement of total factor productivity, significant increase in the consumption rate, and maintaining economic growth within a reasonable range [3][10][15] - Total factor productivity is emphasized as a new indicator to measure economic efficiency and productivity development, with strategies including optimizing traditional industries, supporting emerging industries, and promoting core technology breakthroughs [3][10][11] - The plan aims to increase the resident consumption rate by 3-5 percentage points to 43%-45%, enhancing domestic demand as a key driver of economic growth [15][16][18] Group 2 - The plan outlines a clear blueprint for the next five years, with a focus on high-quality development, technological self-reliance, and comprehensive deepening of reforms [4][5] - It includes twelve key tasks across various sectors such as industry, technology, domestic market, and green development, with a notable shift in priorities compared to previous plans [5][8] - The emphasis on a strong domestic market and the need to break down barriers to create a unified national market is highlighted as essential for enhancing internal circulation [24][25] Group 3 - The plan stresses the implementation of more proactive macroeconomic policies to maintain economic growth within a range of 4.5%-5% [3][26] - It calls for strengthening counter-cyclical and cross-cyclical adjustments in macroeconomic policies, indicating a more aggressive approach compared to previous plans [26][27] - Financial policies are to be aligned with industrial development, emphasizing the importance of direct financing and the use of diverse financial instruments to support economic growth [31][32]

Core Insights - The article emphasizes the importance of fixed asset investment in stabilizing economic growth and optimizing investment structure for high-quality economic development [1] Investment Landscape Changes - Recent years have seen significant changes in China's investment landscape, with fixed asset investment growth slowing to 3.2% in 2024 and 0.5% from January to August 2025 [2] - Real estate investment, once a primary driver, has declined significantly, with a 27.1% drop in 2024 compared to 2021, and a further 12.9% decrease from January to August 2025 [2] - The share of secondary industry in fixed asset investment has increased to 34.8% in 2024, up 6.1 percentage points from 2020, with manufacturing investment growing by 5.1% from January to August 2025 [2] High-Tech Industry Competition - The rapid growth of high-tech industry investment has led to "involution" competition, characterized by price wars and reduced quality, impacting profitability [3] - For instance, the profit growth of large-scale automotive manufacturing enterprises was -0.3% in the first eight months of 2025, contrasting sharply with a 20.2% investment growth [3] Enhancing Investment Efficiency - Improving investment efficiency involves several key areas, including necessary investment returns for enterprises, financial feasibility of infrastructure projects, and the efficiency of investments in driving economic growth [4][6][7] - The capital-output ratio in 2024 reached 9.38, the highest since 2020, indicating a need to enhance the relationship between investment and consumption [7] Role of Investment in Economic Quality - The quality of economic growth is linked to total factor productivity, which needs to be improved through targeted investments in technology and resource reallocation [8] - In 2024, total factor productivity contributed 2.2% to GDP growth, highlighting the importance of investment in enhancing economic potential [8] Recommendations for Investment Improvement - Addressing "involution" competition through government intervention and industry self-regulation is crucial for maintaining a healthy market environment [9] - Developing a sustainable financing model for infrastructure projects is essential, focusing on balancing government and private sector roles [10][11] - Enhancing investment's role in boosting consumption and optimizing supply structure is vital for future economic stability [12][13]

1. Report Industry Investment Rating No relevant content provided. 2. Core Views of the Report - Long - term: Multiple policy goals and strategic directions in the announcement will have a profound impact on the medium - and long - term interest rate center. Maintaining a relatively stable manufacturing proportion can reduce the downward traction on the interest rate center, and the growth of total factor productivity brought by technological innovation can hedge the decline of the demographic dividend [5][28] - Short - term: The implementation of the "15th Five - Year Plan" has a positive reaction on risk assets, suppressing the bond market on the emotional level. The previous rebound of the bond market may be coming to an end, and it is advisable to consider phased defense after the market sentiment returns to the neutral range [6][28] 3. Summary by Relevant Catalogs 3.1 Strategy Thinking: Interest Rate Trends from the "15th Five - Year Plan" Direction Question 1: Impact of "Manufacturing Proportion" on the Medium - and Long - Term Interest Rate Center - There is a positive correlation between manufacturing proportion and the long - term interest rate center, which is reflected in both domestic and overseas markets. In China, from 2006 - 2013, the manufacturing proportion was stable above 30%, and the interest rate showed a box - shaped shock. After 2013, the manufacturing proportion declined, and the interest rate trended downward. Overseas, similar relationships can be observed in the data of the US, Japan, India, and Thailand [2][8][9] - The reasons for the correlation include changes in capital demand, productivity growth rate, and the balance of savings and investment. A decline in the manufacturing proportion may lead to a slowdown in capital demand, a slowdown in productivity growth, and an imbalance in savings and investment [3][9] - According to historical data regression, for every 1 - percentage - point decrease in the manufacturing proportion, the interest rate center in China, Japan, and the US will decline by about 20, 50 - 60, and 50 - 100 basis points respectively. If the manufacturing proportion remains stable during the "15th Five - Year Plan", the downward traction on the interest rate may weaken [18] Question 2: Impact of the Development of the Technology Industry on the Interest Rate Center - The development of the technology industry generally has an upward - pushing effect on the interest rate center. Using the "proportion of high - tech exports in the total value of manufactured goods exports" as a proxy variable, a positive correlation can be found between the high - tech product export proportion and the interest rate center in China, the US, and Japan. The development of the technology industry can improve total factor productivity, hedge the demographic dividend, and promote the potential economic growth rate [4][22] Question 3: Implicit Growth Target of the 2035 Vision Plan - Given that the per - capita GDP in 2024 was $13,400, assuming an average nominal growth rate of 5%, 5.5%, or 6% by 2035, the per - capita GDP will reach $23,000, $24,000, and $25,000 respectively, meeting the "medium - developed country level". It is speculated that the target growth rate during the "15th Five - Year Plan" may be set at around 5% [5][25] 3.2 Transaction Review: Upward Shift of the Yield Curve - **Funding Situation**: The central bank made a small - scale net injection of funds this week, with a total net injection of 78.1 billion yuan. The central bank will conduct a 900 - billion - yuan 1 - year MLF operation next Monday, with a net injection of 200 billion yuan after the maturity of 700 billion yuan of MLF. The funding situation remained stable, with the operating centers of DR001, DR007, and DR014 moving slightly or significantly upward [29] - **Yield Curve**: The yields of treasury bonds of all maturities increased this week. The 1 - year and 10 - year treasury bond yields increased by 3bp and 2bp to 1.47% and 1.85% respectively, and the 10 - 1 term spread remained basically flat at 38bp. The bond market trend was "up - and - down", affected by various factors such as Sino - US talks, market easing expectations, and the Fourth Plenary Session of the 20th CPC Central Committee [35] - **Duration and Indicator Signals**: From October 20th to 24th, the median duration of public funds continued to rise slightly to 2.76 years, and the duration divergence index rose slightly to 0.57. Among the ten interest rate synchronization indicators this week, "positive" and "negative" signals each accounted for 5/10, and the copper - gold ratio sent a "negative" signal [41][43]

Group 1 - The 20th Central Committee's Fourth Plenary Session approved the suggestions for the 15th Five-Year Plan, setting major goals and strategic deployments for national economic and social development [1][3] - The session emphasized the importance of the "two establishments" and "two safeguards," urging unity in thought and action among party members to achieve the goals outlined in the plan [1][4] - The session highlighted the significance of the 15th Five-Year Plan period as a critical phase for achieving socialist modernization, marking a new starting point for China's development [3][4] Group 2 - The session called for a focus on high-quality development, leveraging China's advantages in its political system, market size, industrial structure, and talent resources to respond to external uncertainties [4][6] - It was noted that the 15th Five-Year Plan must prioritize the new round of technological revolution and industrial transformation, particularly in fields like AI and biotechnology, to enhance innovation capabilities [6][7] - The importance of expanding high-level openness and deepening reforms was emphasized, signaling China's commitment to cooperation and mutual development with other countries [7][8] Group 3 - The session underscored the need for a high level of security as a prerequisite for high-quality development, advocating for a comprehensive approach to national security alongside economic and social development [8][10] - It was stated that achieving the goals of the 15th Five-Year Plan requires a strong commitment to the Party's leadership and the implementation of innovative theories to guide development [10][12] - The session called for unity among party members to transform the 15th Five-Year Plan into reality, emphasizing the importance of collective effort in advancing national rejuvenation [14]

Group 1 - The 20th Central Committee's Fourth Plenary Session will review the suggestions for the 15th Five-Year Plan, emphasizing innovation to enhance total factor productivity amid aging population and external complexities [1] - China is expected to increase investments in renewable energy to maintain its leading position and achieve carbon peak before 2030 [1][3] - The government is likely to implement measures to stimulate domestic demand, including income redistribution and further opening of the service sector [1][3] Group 2 - China's investment in R&D is yielding returns, with the country projected to become the 10th most innovative economy by 2025 [2] - The government will leverage its annual pool of 5 million STEM graduates and increase investments in AI, quantum computing, integrated circuits, biotechnology, humanoid robots, and renewable energy [2] - The emphasis will be on maintaining the manufacturing sector's share of the economy while transitioning from "Made in China" to "Created in China" [2] Group 3 - The green development agenda will remain a key component of industrial transformation, with annual targets for the "dual carbon goals" expected [3] - Investment will continue in renewable energy sectors such as wind, solar, hydrogen, smart grids, and electric vehicles [3] - The government will focus on improving residents' employment and income to boost consumption and reduce precautionary savings [3][4] Group 4 - There is strong demand for service consumption in areas like education, healthcare, and tourism, with the government opening the service sector to private and foreign capital [4] - The government is addressing issues of "involution" and disorderly competition, with plans to avoid redundant investments and reduce excess capacity [5]

Core Insights - The report analyzes China's potential economic growth during the "14th Five-Year Plan" period, estimating a baseline growth rate of 4.5%-5.3% and an optimistic scenario of 5.1%-5.8% [1][9][43]. Group 1: Economic Growth Projections - The baseline scenario predicts an average annual growth rate of approximately 5.3%, while the optimistic scenario could reach 5.8% [1][28]. - If actual growth meets potential levels, per capita GDP could reach approximately $17,200 by 2030 and $22,400 by 2035 [1][28]. Group 2: Factors Influencing Growth - Capital stock growth is expected to average around 5.5% annually, contributing approximately 2.1 percentage points to GDP growth, despite a slowdown due to declining savings and investment rates [2][17]. - Labor force decline due to aging demographics is projected to reduce GDP growth by about 0.08 percentage points annually, despite improvements in labor quality [2][21]. - Total factor productivity (TFP) is anticipated to be a key growth driver, with baseline annual growth around 2% and optimistic growth potentially reaching 3% [2][27]. Group 3: Recommendations for Sustaining Growth - The report suggests multiple strategies to mitigate the decline in potential growth, including enhancing innovation, optimizing factor allocation, and improving population policies [3][47]. - It emphasizes the need to expand domestic demand and stabilize the real estate market to find new growth models [3][49]. - The report advocates for a balanced approach to total and structural relationships, focusing on cultivating new productivity systems and responding effectively to external environmental changes [3][47].

Economic Growth Potential - The potential economic growth rate for China during the "14th Five-Year Plan" period is estimated to be between 4.5% and 5.3% under baseline conditions, and between 5.1% and 5.8% in optimistic scenarios[6] - The average annual growth rate of capital stock is projected to decline to around 5.5%, contributing approximately 2.1 percentage points to GDP growth[11] - Labor force participation is expected to decrease, with the working-age population projected to drop to approximately 805 million by 2030, resulting in an annual reduction of about 4.7 million people[15] Factors Influencing Growth - The contribution of total factor productivity (TFP) to economic growth is expected to increase, with annual growth rates projected at around 2% under baseline conditions and up to 3% in optimistic scenarios[20] - The decline in capital and labor contributions will necessitate a greater reliance on TFP as the main driver of economic growth[20] - The average annual growth rate of labor productivity is estimated to be around 5.4% during the "14th Five-Year Plan" period, supported by technological advancements and improvements in labor quality[33] Policy Recommendations - To mitigate the decline in potential growth rates, it is recommended to enhance TFP through increased R&D investment and market-oriented reforms[39] - Expanding domestic effective demand is crucial to align actual economic growth with potential growth rates, addressing the negative output gap[41] - A balanced approach to investment and consumption is necessary, focusing on emerging industries and consumer sectors to stimulate economic activity[43]