Group 1 - The core viewpoint of the report emphasizes the importance of the "15th Five-Year Plan" in achieving the long-term goal of building a modern socialist country by 2035, focusing on economic stability and structural transformation [3][4][9] - The report anticipates that the "15th Five-Year Plan" will set an implicit GDP growth target of around 4.5%-5%, reflecting a commitment to maintaining economic growth despite challenges [10][12] - The report highlights the need for a balanced economic structure, emphasizing the role of consumption in driving growth and the importance of stabilizing prices to achieve the 2035 goals [11][12] Group 2 - The report outlines key areas of focus during the "15th Five-Year Plan," including the development of new productive forces, regional coordination, and deepening reform and opening-up [4][6] - It discusses the significance of enhancing service consumption as a new engine for economic growth, with a particular emphasis on improving the quality of services and expanding supply [52][55] - The report indicates that employment stability and income growth will be prioritized, with strategies aimed at reducing income disparities and supporting vulnerable groups [62][64]

Core Viewpoint - China's macroeconomic policy is entering a critical period for stable growth in the fourth quarter, with coordinated monetary and fiscal measures aimed at creating a favorable financial environment for economic recovery [1]. Group 1: Monetary Policy - The People's Bank of China (PBOC) announced a 7-day reverse repurchase operation of 212.5 billion yuan, maintaining the operation rate at 1.40%, while net draining 23.5 billion yuan on the same day due to 236 billion yuan of reverse repos maturing [1]. - Despite a slight tightening in market liquidity due to tax periods and month-end factors, the overall liquidity remains stable under the PBOC's management, with expectations for the upcoming 700 billion yuan Medium-term Lending Facility (MLF) to be rolled over or slightly increased to stabilize market expectations [1]. Group 2: Credit Expansion Measures - The three major policy banks have disclosed that nearly 300 billion yuan of a new 500 billion yuan policy financial tool has been deployed, which is expected to drive total project investments exceeding 4 trillion yuan, with full deployment anticipated by the end of the year [3]. - Compared to 2022, the current round of tools has a broader scope, including sectors like service consumption, digital economy, artificial intelligence, and technological innovation, aiming to leverage project capital to support economic structural transformation [3]. Group 3: Fiscal and Banking Coordination - The Ministry of Finance and the PBOC conducted a 120 billion yuan one-month treasury cash deposit auction, enhancing the coordination between fiscal and monetary policies [4]. - Regional small and medium-sized banks have initiated a new round of deposit rate cuts to alleviate pressure on net interest margins, creating conditions to support the real economy [4]. Group 4: Future Outlook - Professionals generally anticipate that monetary policy will continue to strengthen in the fourth quarter, with the PBOC expected to utilize various tools and potentially implement reserve requirement ratio (RRR) cuts and interest rate reductions to enhance support for the real economy [5]. - The synergistic effect of monetary and fiscal policies is expected to provide strong support for achieving the annual economic and social development goals [5].

Core Insights - In Q3 2025, China's exports exceeded expectations with a growth of 6.6%, while industrial added value grew by 5.8%. However, nominal GDP only increased by 3.7%, indicating economic slowdown primarily due to a 6.3% decline in fixed asset investment and widening income disparity, leading to weak consumption growth of only 3.4% per capita [1][3][4]. Economic Performance - The nominal GDP for Q3 2025 reached 35.45 trillion yuan, with a comparable growth of 4.8% and a nominal growth of 3.7%, reflecting a decline from Q2's 5.2% and 3.9% respectively [4]. - Industrial added value in Q3 was 10.35 trillion yuan, accounting for 29.2% of GDP, with a comparable growth of 5.8% but a nominal growth of only 2.8%, indicating a significant drop in domestic consumption [6]. Investment and Consumption Challenges - Fixed asset investment in Q3 was 12.33 trillion yuan, down 6.3% year-on-year, impacting GDP growth by approximately 2.2 percentage points. This decline has been attributed to reduced profits in state-owned enterprises and a contraction in private capital [9]. - Consumer spending showed weakness, with retail sales growth declining from 6.4% in May to 3% in September. Per capita disposable income grew by only 4.7%, with significant income disparity affecting consumption rates [11][12]. Structural Economic Risks - The reliance on fixed asset investment and exports has made the economy vulnerable, with structural risks becoming more pronounced. The long-term dependence on external variables for growth has highlighted the urgent need for a shift towards domestic consumption as a growth driver [14]. - The ongoing trade tensions with the U.S. and weak domestic demand have exacerbated these structural issues, necessitating immediate action to rebalance the economy [14][18]. Policy Recommendations - There is a pressing need for proactive structural measures to support consumer spending, as the current growth model relying heavily on exports is unsustainable. The focus should shift towards enhancing social security and increasing household income to stimulate domestic consumption [15][18].

Overseas Macro - Emerging market manufacturing is recovering, with the global manufacturing PMI at 50.8 in September, a slight decrease of 0.1 percentage points from August, but still above the expansion threshold[5] - The US consumer confidence index has dropped for three consecutive months, indicating weakening consumer expectations and potential pressure on future demand[7] - European inflation has risen again, with the EU CPI and core CPI both increasing by 2.6% year-on-year in September, reflecting the impact of US tariff policies on prices[9] Domestic Macro - China's GDP grew by 4.8% year-on-year in Q3, with a cumulative growth of 5.2% for the first three quarters, showing strong resilience overall[12] - External demand remains strong while internal demand is weak, with consumption contributing 2.7 percentage points, investment 0.9 percentage points, and net exports 1.2 percentage points to GDP growth[13] - Fixed asset investment fell by 6.8% year-on-year in September, with manufacturing investment down by 1.9% and real estate investment down by 21.2%[17] Policy Outlook - Uncertainty remains, with signs of monetary and fiscal easing emerging; the Federal Reserve cut rates by 25 basis points to a range of 4.00%–4.25% in September[27] - China's policy is expected to continue as planned, focusing on targeted fiscal measures and a more neutral monetary stance in Q4[33] Asset Performance - Precious metals surged, with gold spot prices rising by 14.8% and silver by 31.1%, both reaching historical highs due to Fed rate cuts and trade tensions[34] - The Chinese stock market adjusted due to increased trade negotiation risks, despite a generally positive global market response to Fed easing[34]

Core Insights - The global attractiveness of RMB assets has significantly increased, with overseas entities holding over 10 trillion RMB in domestic financial assets, and RMB bonds and stocks being included in mainstream global asset trading indices [1] Group 1: Financial Market Impact - The rise in attractiveness of RMB assets is expected to attract more foreign capital into China's stock and bond markets, injecting valuable incremental funds into the market [2] - This influx of capital will help repair asset prices, enhance market liquidity, and lower transaction costs, leading to a more effective pricing mechanism [2] - Institutional investors, regardless of their background, tend to prefer fundamentally strong and transparently governed large-cap blue-chip stocks, which will further optimize the investor structure in the A-share market [2] Group 2: Corporate Financing and Innovation - The popularity of RMB assets means that Chinese companies, especially high-quality ones, will have better access to global capital, thereby widening their financing channels [3] - A broader investor base can lead to more favorable pricing, reducing corporate financing costs [3] - The participation of global institutional investors can address certain shortcomings of indirect financing in supporting technological innovation, thereby stimulating overall innovation vitality in society [3] Group 3: Policy Autonomy and International Financial Influence - The increased attractiveness of RMB assets is likely to reduce China's dependence on foreign exchange reserves, enhancing monetary policy autonomy [4] - The People's Bank of China can focus more on domestic economic cycles and development needs rather than passively following overseas central banks [4] - As more global indices include Chinese assets, China's asset allocation will shift from being an "optional" choice to a "standard" inclusion, potentially expanding China's influence in financial rule-making [4]

Core Insights - The global attractiveness of RMB assets has significantly increased, with overseas entities holding over 10 trillion RMB in domestic financial assets, and RMB bonds and stocks being included in mainstream global asset trading indices [1] Group 1: Financial Market Impact - The rise in attractiveness of RMB assets is expected to attract more foreign capital into China's stock and bond markets, injecting valuable incremental funds into the market [2] - This influx of capital will help restore asset prices, enhance market liquidity, and lower transaction costs, leading to a more effective pricing mechanism [2] - Institutional investors, regardless of their domestic or foreign background, tend to favor fundamentally strong and transparently governed large-cap stocks, which will further optimize the investor structure in the A-share market [2] Group 2: Corporate Financing and Innovation - The popularity of RMB assets means that Chinese companies, especially high-quality ones, will have better access to global capital, thereby broadening their financing channels [3] - A wider investor base can lead to more favorable pricing, reducing corporate financing costs and supporting technological innovation [3] - The participation of global institutional investors can help address certain shortcomings of indirect financing in supporting innovation, thereby energizing the overall innovation capacity of society [3] Group 3: Policy Autonomy and International Financial Influence - The increased attractiveness of RMB assets is likely to reduce China's dependence on foreign exchange reserves, enhancing the autonomy of monetary policy [4] - The People's Bank of China can focus more on domestic economic cycles and development needs rather than passively following foreign central banks [4] - As more global indices include Chinese assets, the weight of these assets in global asset allocation is expected to rise, which will enhance China's influence in financial rule-making [4]

Report Industry Investment Rating No relevant content provided. Core Viewpoints - The effect of anti-involution is minimal, and the year-on-year growth rates of PPI and M1 are rising due to low bases. The economic data in October is crucial. Exports maintained resilience in September, but the growth rate is expected to decline significantly in Q4. The central government has allocated 500 billion yuan to local governments, and the economic growth rate is expected to pick up in Q4 [1]. - The Fourth Plenary Session is expected to focus on emerging technology, supply chain security, and economic restructuring. The "15th Five-Year Plan" will provide specific policy measures. Sino-US relations are at a critical juncture, and the market may be hit if the leaders do not meet in late October or early November [2]. - The sales area of new homes in 30 large and medium-sized cities has seasonally rebounded but is still far below the historical level. The housing market remains pessimistic. The bond market is expected to be volatile and bullish, with the stock market being the main risk [3]. Summary by Directory 1. Next Week's Key Focus: The Fourth Plenary Session and Sino-US Relations (1) Anti-involution Effect is Minimal, and the Domestic Economy Remains Sluggish - Exports grew by 8.3% year-on-year in September, continuing to show resilience. However, the growth rate is expected to decline in Q4 due to the high base. High-frequency data shows that exports in October may be lower than in September [12]. - The effect of anti-involution is minimal, as shown by the PPI. The year-on-year growth rate of PPI has been rising for five months, mainly due to the low base. The economic data in October is crucial [14]. - The year-on-year growth rate of M1 is also affected by the low base. The domestic economy remains weak, as shown by the social financing and credit data. The government has allocated 500 billion yuan to local governments, and the economic growth rate is expected to pick up in Q4 [17]. (2) The 15th Five-Year Plan and Sino-US Relations - The Fourth Plenary Session is expected to focus on emerging technology, supply chain security, and economic restructuring. The "15th Five-Year Plan" will provide specific policy measures [21]. - Sino-US relations are at a critical juncture, with the leaders expected to meet during the APEC Summit in late October or early November. The market may be hit if the leaders do not meet and the US imposes 100% tariffs. China will implement new rare earth export control measures on December 1 [21]. 2. Real Estate Market Tracking: New Home Sales are Far Below the Seasonal Level - The sales area of new homes in 30 large and medium-sized cities has seasonally rebounded but is still far below the historical level. First-tier cities are weak, second-tier cities are similar to last year, and third-tier cities are higher than in 2023 [3]. - The listing price index of second-hand homes has continued to decline, with the decline accelerating in second- and third-tier cities. The overall trend of the real estate market remains pessimistic [3]. 3. Treasury Bonds: Continue to Run Strongly - The bond market has been volatile this week, with the Sino-US confrontation increasing market risk aversion and benefiting the bond market. The bond market is expected to be volatile and bullish, with the stock market being the main risk [34].

Core Insights - The Global Wealth Management Forum held on October 19 focused on "The Future Path Under Global Changes," highlighting the contrast between technological innovation and declining profit margins in industrial enterprises, attributed to China's economic structural transformation pains [1][3]. Economic Growth Potential - China has significant long-term growth potential, with emerging economies generally showing higher growth prospects. Chinese enterprises exhibit strong innovation capabilities, and the economy is in need of transformation [3]. Current Economic Challenges - In the short term, China's economy is facing challenges due to structural transformation pains, leading to a decline in industrial profit margins. The high growth rate of manufacturing investment is crucial for maintaining growth, with a projected year-on-year increase of 9.2% in 2024, which is expected to stimulate domestic demand [3]. Supply and Demand Imbalance - There is a notable issue where demand in the economy is rapidly shrinking, while supply capacity continues to increase, leading to an imbalance. This situation necessitates a focus on enhancing resident consumption as a key development goal, transitioning from high-speed growth to high-quality development [3].

Core Insights - The financial statistics released by the People's Bank of China indicate a robust financial support for the real economy, driven by a moderately loose monetary policy [1] Monetary Supply and Financing - As of the end of September, the M2 balance reached 335.38 trillion yuan, with a year-on-year growth of 8.4%, maintaining a high growth rate despite last year's high base [2] - The total social financing stock was 437.08 trillion yuan, showing a year-on-year increase of 8.7%, which is 0.7 percentage points higher than the same period last year [2] - In the first three quarters, the cumulative increase in social financing amounted to 30.09 trillion yuan, which is 4.42 trillion yuan more than the previous year [2] Credit Structure and Loan Growth - By the end of September, the balance of RMB loans was 270.39 trillion yuan, reflecting a year-on-year growth of 6.6% [3] - In the first three quarters, RMB loans increased by 14.75 trillion yuan, with household loans rising by 1.1 trillion yuan and corporate loans increasing by 13.44 trillion yuan [3] - The loan structure is improving, with significant growth in medium to long-term loans for both households and enterprises, particularly in key industries like equipment manufacturing and high-tech manufacturing [3][4] Policy Support and Cost of Financing - The average interest rate for newly issued corporate loans was approximately 3.1% in September, which is about 40 basis points lower than the same period last year, indicating a stable decline in financing costs [5] - Recent policies aimed at reducing interest costs for personal consumption loans and service industry loans have further stimulated demand [5] - Adjustments in housing purchase policies in major cities have led to a rebound in personal housing loan demand, with the average interest rate for new personal housing loans also at approximately 3.1%, down about 25 basis points year-on-year [5] Economic Outlook - The internal and external environments are showing signs of stabilization and improvement, with positive changes in corporate operations, consumer spending, and trade [6] - The monetary policy is expected to continue supporting the real economy in the fourth quarter, alongside active fiscal policies and the gradual realization of previously introduced measures [6] - Long-term structural transformation and industrial upgrades in the Chinese economy are anticipated to progress steadily, leading to a more balanced supply-demand relationship in the real economy [6]

Inflation Trends - Core CPI in September increased by 0.9% year-on-year, continuing its upward trend, significantly outperforming the overall CPI which decreased by 0.3% due to falling pork prices[6] - Industrial consumer goods prices rose by 1.8%, marking the fifth consecutive month of growth, driven partly by rising prices of gold and copper[6] Price Dynamics - Gold jewelry and platinum prices increased by 42.1% and 33.6% year-on-year, respectively, reflecting the impact of international commodity price fluctuations[6] - The PPI decline narrowed to 2.3% year-on-year in September, with significant contributions from coal processing and black metal smelting industries, reducing the downward pressure on PPI by approximately 0.34 percentage points[6] Consumer Behavior - The shift from a "price war" to a "value war" in consumer goods indicates an improvement in supply quality, with household appliance CPI trends diverging from copper price movements[6] - Strong demand for personalized and upgraded products is evident, with prices for certain categories like arts and crafts increasing by 14.7% year-on-year[6] Economic Outlook - The report suggests that the main drivers of economic growth are shifting from external demand to high-quality domestic demand, indicating a structural transformation in the economy[6] - Future inflation dynamics will largely depend on internal policies, with expectations for continued support for domestic demand through fiscal and monetary measures[6]