Core Viewpoint - The recent joint statement from the China-US Geneva economic talks on May 12 is seen as a potential turning point in easing tensions between the two nations, with significant tariff reductions announced [1][2]. Economic Rebalancing - The joint statement indicates a notable decrease in tariffs, with China reducing tariffs on US goods from 125% to 10% within the first 90 days, while the US will lower tariffs on Chinese goods to 30% [2][3]. - A 24% tariff will be suspended for 90 days, allowing for negotiations before July [3]. US Economic Context - The US has historically maintained high tariffs, averaging around 30%, which has been a part of its economic development strategy [3]. - The current economic situation suggests that the US cannot revert to pre-April 2 conditions, with markets anticipating fiscal easing from China and tax cuts from the US [3]. US Fiscal Pressure - As of March 2025, the US national debt is projected to reach approximately $36.6 trillion, with a significant portion of low-interest bonds maturing between 2025 and 2027, leading to increased interest payments [4]. - The US government is using tariff increases as a means to alleviate fiscal pressure, with potential tariff revenues significantly exceeding current levels [4][5]. Chinese Economic Strategy - China is focusing on boosting domestic consumption, particularly in the service sector, to counteract economic pressures [9]. - The first quarter of 2023 saw a GDP growth rate of 5.4%, driven by strong exports and a gradual recovery in consumption [9]. Key Economic Drivers for 2025 - The "Two New" and "Two Heavy" initiatives are identified as critical for China's economic development in 2025, focusing on equipment upgrades and major strategic projects [10][11]. - The expected policy support for these initiatives could reach around 3 trillion yuan, with investment multipliers anticipated to be higher than in 2024 [11]. Stimulus Measures - Six potential measures to stimulate the economy include expanding fertility subsidies, injecting capital into state-owned banks, increasing consumer subsidies, advancing supply-side reforms, issuing special government bonds, and raising rural pension levels [12][13][14][15][16]. Market Outlook - The equity market is expected to enter a "long-cycle, structural bull market," with monetary policy supporting the stock market while fiscal measures are necessary for economic recovery [16]. - The bond market may face risks in the second half of the year, with a potential upward trend in yields as economic conditions stabilize [16].

Group 1 - The core viewpoint of the article emphasizes that U.S. Treasury Secretary Mnuchin remains confident in Trump's tariff plans despite the recent market downturn, focusing on the impact on small businesses and consumers rather than Wall Street [1][3] - Mnuchin suggests that the market will experience a transitional period due to tariffs taking effect this month and next, but he believes the market sell-off is a temporary phenomenon [1] - The article highlights the escalation of the U.S.-Canada trade war, with Canada retaliating against U.S. tariffs by imposing counter-tariffs on $155 billion CAD worth of U.S. products and threatening to tax electricity exports to certain U.S. states [1][2] Group 2 - There is a noted shift in Trump's economic policy focus, moving away from emphasizing stock market performance to prioritizing the reduction of long-term bond yields [4] - This change raises questions about whether the stock market, previously a key performance indicator for the Trump administration, has seen its priority diminished amid increasing policy uncertainties [4]