Group 1 - The core viewpoint of the article emphasizes the need for a comprehensive approach to address "involution" in various sectors, highlighting the importance of policy coordination and market mechanisms [2][6][65] - The recent meeting of the Central Financial Committee outlines a higher-level and broader coverage for the "anti-involution" initiative, focusing on the integration of local governments, enterprises, and residents [2][65] - The article identifies a significant decline in revenue growth for "involution" industries, dropping from 28.5% in 2021 to -0.4% in 2024, while fixed costs remain rigid, leading to a drastic reduction in average net profit growth to -28.2% [20][19][66] Group 2 - "Involution" is primarily manifested through low-price competition, which compresses supply chain costs, with accounts payable turnover decreasing to 4.6% in 2024, down by 1 percentage point from 2021 [26][31][66] - The internal cost-cutting measures in "involution" industries include a significant reduction in sales expenses, projected at -9.7% for 2024, and a decrease in management expenses growth to 2.6% [31][66] - The profitability of "involution" industries remains under pressure, with a return on assets (ROA) of 2.9% in 2024, a decline of 2.7 percentage points from the 2021 peak, which may hinder long-term industry transformation and development [40][66] Group 3 - To resolve the "involution" dilemma, the focus should be on alleviating supply-demand contradictions and promoting the orderly exit of outdated production capacity, while also restructuring demand expansion dynamics [44][50][66] - Structural transformation can be driven by policy guidance, industry self-discipline, and market mechanisms, encouraging innovation and moving away from price competition [50][66] - Addressing structural unemployment during the transformation process by accelerating the development of the service sector is crucial, as recent trends show a decline in employment in key service industries [56][66]

Group 1 - The Central Economic Committee emphasized the need to deepen the construction of a unified national market and promote high-quality development of the marine economy, focusing on legal governance of low-price competition and enhancing market systems [1][2] - The People's Bank of China proposed to strengthen monetary policy adjustments, maintain liquidity, and guide financial institutions to increase credit support for key sectors [4][5] - The State Council issued a plan to improve the credit repair system, aiming to create a better social credit environment and facilitate the normal operation of restructured enterprises [6][7] Group 2 - The State Council meeting highlighted the importance of increasing technological innovation efforts and integrating technological achievements into production, while also improving public service efficiency through digital technology [8][9] - The National People's Congress Finance and Economic Committee reviewed the 2024 central budget draft, identifying issues in budget management and suggesting reforms to enhance fiscal policy effectiveness [11][12]

Group 1: Overview of "Anti-Involution" Policy - The recent "anti-involution" initiative is characterized by a higher stance, broader coverage, and stronger coordination among local governments, enterprises, and residents[2] - The Central Financial Committee emphasized "lawful governance of low-price disorderly competition" and "orderly exit of backward production capacity" as key directions for the "anti-involution" policy[2] - Revenue growth in "involution" industries dropped from 28.5% in 2021 to -0.4% in 2024, while fixed cost growth remained rigid at 12.3%[2] Group 2: Negative Feedback from Involution - Involution industries experienced a significant decline in average net profit growth to -28.2% in 2024, contrasting with a positive growth of 3.5% in non-involution industries[2] - The accounts payable turnover rate for involution industries decreased to 4.6% in 2024, indicating a shift in cost management strategies[3] - Sales expenses in involution industries fell by 9.7% in 2024, while management expenses grew at a slower rate of 2.6%[3] Group 3: Strategies to Address Involution - To resolve the "involution" dilemma, it is crucial to alleviate supply-demand contradictions and promote the orderly exit of backward production capacity[5] - Structural transformation can be achieved through policy guidance, industry self-discipline, and market mechanisms to encourage supply innovation[5] - Accelerating the development of the service industry is essential to address structural unemployment issues during the transformation process[6]

Group 1: CPI Trends - June CPI shows a month-on-month decrease of -0.1% and a year-on-year increase of 0.1%, ending a four-month streak of negative values[1] - The contribution of new price factors to the June CPI year-on-year growth is 0.1 percentage points, while the tailing factors contribute 0.0 percentage points[1] - The CPI structure reveals that food items decreased by -0.3% year-on-year, while non-food items increased by 0.1% year-on-year[1] Group 2: PPI Trends - June PPI shows a month-on-month decrease of -0.4% and a year-on-year decrease of -3.6%, marking 33 consecutive months of negative values[1] - The contribution of new price factors to the June PPI year-on-year growth is -2.0 percentage points, while tailing factors contribute -1.6 percentage points[3] - The PPI structure indicates that the production materials category decreased by -4.4% year-on-year, while the living materials category decreased by -1.4% year-on-year[3] Group 3: Future Outlook - For Q2 2025, the average year-on-year growth rate of CPI is projected at -0.03%, while PPI is projected at -3.20%, indicating a potential decline in nominal GDP growth compared to Q1[4] - The central government's emphasis on addressing low-price disorder in competition may lead to improvements in product quality and a gradual exit of outdated production capacity[4] - The contribution of tailing factors to PPI is expected to rise, potentially alleviating the extent of PPI declines in the coming months[4]

Report Industry Investment Rating - No information provided Core Viewpoints - The passing of the "Big Beautiful" tax and spending bill in the US marks a shift from the "tight fiscal expectation + neutral monetary" phase in the first half of the year to a policy phase of "easy to loosen, hard to tighten." In China, the Central Financial and Economic Commission's meeting has reignited market inflation trading [3]. - The inflation trading this round is not smooth. Overseas, the core is the inflation expectation dominated by currency, while in China, it is the supply - side. Further details of production reduction policies are needed to determine the main line of inflation trading [3]. - Attention should be paid to corresponding commodity sectors. Domestically, the black and new - energy metal sectors are most sensitive to the supply - side. Overseas, the energy and non - ferrous sectors benefit significantly from inflation expectations [4]. - For commodities and stock index futures, it is recommended to allocate long positions in industrial products on dips [5]. Summary by Related Catalogs Market Analysis - In July, a Politburo meeting in China is awaited. In May, domestic investment data weakened, especially in the real estate sector, which may drag down fiscal revenue and the entire real - estate chain. Exports were also under pressure, while consumption showed resilience. China's June manufacturing PMI rebounded, and the CPI turned positive year - on - year, with the core CPI rising 0.7% year - on - year, driven by industrial consumer goods. The PPI decreased 3.6% year - on - year in June, with the decline widening by 0.3 percentage points [2]. - Since July, policies to address low - price and disorderly competition in industries such as photovoltaics, lithium batteries, automobiles, and steel are expected to heat up, and some commodity prices have recovered. The low base of PPI in the second half of 2024 may boost the year - on - year PPI reading in the second half of this year [2]. - The US will impose tariffs ranging from 25% to 40% on imports from 14 countries including Japan and South Korea starting from August 1. The US and Japan will continue tariff negotiations, and the EU aims to reach a trade agreement with the US by August 1. The US Commerce Secretary plans to talk with China in early August [2]. Macro - inflation Trading - The "Big Beautiful" tax and spending bill in the US may increase the US government's debt by $3.4 trillion in the next decade, leading to a shift in US policies. In China, the Central Financial and Economic Commission's meeting has re - heated market inflation trading [3]. - Overseas, the US one - year inflation expectation in June dropped from 3.2% to 3.0%, a five - month low. However, the Fed's path to restarting easing is not smooth, and although the "Big Beautiful" bill has passed, Treasury bond issuance will still absorb market liquidity [3]. - In China, the core of inflation trading is on the supply - side. The 2025 Central Financial and Economic Commission meeting is different from the 2015 one, and more details of production reduction policies are needed to determine the main line of inflation trading [3]. Commodity Sectors - Domestically, the black and new - energy metal sectors are most sensitive to the supply - side. Overseas, the energy and non - ferrous sectors benefit significantly from inflation expectations [4]. - The black sector is still dragged down by downstream demand expectations. The supply shortage in the non - ferrous sector remains unresolved. In the energy sector, the short - term geopolitical premium has ended, and the medium - term supply is expected to be relatively loose. OPEC+ will increase production by 548,000 barrels per day in August, higher than expected [4]. - The EIA expects the Brent crude oil price to be $69 per barrel in 2025 (previously $66). The price of agricultural products has limited fluctuation in the short term due to the absence of weather disturbances [4]. Strategy - For commodities and stock index futures, it is recommended to allocate long positions in industrial products on dips [5]. Important News - The Chinese government supports enterprises in stabilizing employment positions, including expanding the scope of special loans for stabilizing and expanding employment, increasing the proportion of unemployment insurance refunds for enterprises, and allowing enterprises in difficulty to apply for deferred payment of social insurance premiums [7]. - In June, China's CPI turned positive year - on - year after four consecutive months of decline, mainly due to the recovery of industrial consumer goods prices. The year - on - year decline of PPI widened in June, but prices in some industries are showing signs of stabilization and recovery [7]. - Trump has determined that tariffs will be implemented on August 1, 2025. The US and Japan will continue tariff negotiations, and the EU aims to reach a trade agreement with the US by August 1. The US plans to talk with China in early August [2][7]. - COMEX copper futures maintained a 9.6% increase, and Trump intends to impose a 50% tariff on copper. The investigation of the pharmaceutical and semiconductor sectors will be completed by the end of the month [7]. - The US one - year inflation expectation in June dropped from 3.2% to 3.0%, a five - month low, and the three - year inflation expectation remained stable at 3% [7]. - US API crude oil inventories increased by more than 700,000 barrels last week. The EIA expects the Brent crude oil price to be $69 per barrel in 2025 and $58 per barrel in 2026 [7]. - Trump has approved the shipment of more defensive weapons to Ukraine and is considering further sanctions against Russia. He is also considering supporting a new bill for severe sanctions against Russia [7][8].

1. Report Industry Investment Rating - No specific industry investment rating is provided in the report. 2. Core Viewpoints - **Stock Index**: The A-share market is expected to continue to fluctuate. The index fundamentals depend on the domestic economic recovery process. Although the corporate profit situation in the first half of 2025 has improved significantly compared to 2024, and there is support from allocation funds, the index is difficult to break through the central level and rise significantly due to credit contraction and insufficient demand under the background of debt resolution. On the other hand, it will not experience a sharp decline in the short term [1]. - **Treasury Bonds**: The bond market is in an environment with loose funds, stable economy, and low short-term interest rate cut expectations. With insufficient upward and downward momentum, it is expected to continue the fluctuating trend in the short term [2]. 3. Summary by Relevant Catalogs 3.1 Research Views - **Stock Index**: On July 9, 2025, the A-share market fluctuated and closed down. The Wind All A index fell 0.18% with a trading volume of 1.53 trillion yuan. The CSI 1000, CSI 500, SSE 50, and SSE 300 indices also declined. The media sector led the rise, while the non-ferrous metals sector corrected. The recent Central Financial and Economic Commission emphasized the construction of a unified national market, but the impact on related themes depends on the transfer mode and scale of central fiscal incremental policies. Overseas, the Fed's interest rate cut expectation has slowed down, and the boost to domestic small-cap indices has weakened. The fundamentals of the index depend on the domestic economic recovery process, and it is expected to fluctuate [1]. - **Treasury Bonds**: On July 9, 2025, treasury bond futures closed with gains. The central bank conducted 755 billion yuan of 7-day reverse repurchase operations with a stable interest rate of 1.4%. The net withdrawal of funds was 230 billion yuan. The overall capital situation was loose, and the price index remained stable. The bond market is expected to continue to fluctuate in the short term [1][2]. 3.2 Daily Price Changes - **Stock Index Futures**: On July 9, 2025, compared with the previous day, the IH, IF, IC, and IM contracts all declined, with declines of -0.14%, -0.15%, -0.47%, and -0.35% respectively [3]. - **Stock Indices**: The SSE 50, SSE 300, CSI 500, and CSI 1000 indices also declined, with declines of -0.26%, -0.18%, -0.41%, and -0.27% respectively [3]. - **Treasury Bond Futures**: The TS, TF, T, and TL contracts all rose, with increases of 0.00%, 0.02%, 0.03%, and 0.14% respectively [3]. 3.3 Market News - From 2021 to 2024, China's economy maintained an average annual growth rate of 5.5%. The average contribution rate of domestic demand to economic growth was 86.4%, and the average contribution rate of final consumption to economic growth reached 56.2%, 8.6 percentage points higher than that during the 13th Five-Year Plan period [4]. 3.4 Chart Analysis - **Stock Index Futures**: The report presents the trend charts of the main contracts and the basis of IH, IF, IC, and IM [6][7][9]. - **Treasury Bond Futures**: The report shows the trend charts of the main contracts, spot bond yields, basis, inter - period spreads, cross - variety spreads, and capital interest rates of treasury bond futures [13][15][17]. - **Exchange Rates**: The report provides the trend charts of the central parity rates of the US dollar, euro against the RMB, forward exchange rates, and exchange rates of other currency pairs [20][21][22]

Inflation Data - June CPI year-on-year growth rate is 0.1%, an improvement from the previous value of -0.1%, exceeding market expectations of 0%[3] - June PPI year-on-year growth rate recorded at -3.6%, lower than market expectations of -3.2%[7] - Core CPI, excluding food and energy, increased by 0.7% year-on-year, marking a 14-month high[5] Price Movements - Industrial consumer goods prices saw a narrowing decline from -1.0% in May to -0.5% in June, contributing less to CPI decline by approximately 0.18 percentage points[3] - Gasoline prices shifted from a 3.8% decline to a 0.4% increase in June, influenced by international oil price movements[4] - Platinum jewelry prices surged by 12.6% in June, the largest monthly increase in nearly a decade[3] Economic Outlook - The market is expected to exhibit a dual bull structure in stocks and bonds in the second half of the year, supported by improving US-China trade relations and risk-averse funds[2] - Fixed income yields, particularly the 10-year government bond rate, are projected to decline to around 1.5% amid low domestic demand stimulus probability[2] Consumer Demand - Consumer demand is in a critical recovery phase, with incremental counter-cyclical policies expected to enhance demand and gradually improve CPI levels[7] - The demand for high-quality living is increasing, leading to price recoveries in related industries[9]

Group 1: CPI Trends - In June, China's Consumer Price Index (CPI) rose by 0.1% year-on-year, ending a four-month decline [1] - The core CPI, excluding food and energy, increased by 0.7% year-on-year, marking a 14-month high [1][3] - The improvement in CPI indicates a positive signal of demand recovery in the market [1][3] Group 2: Factors Influencing CPI - The rise in CPI was supported by a rebound in industrial consumer goods prices, with the year-on-year decline narrowing from 1.0% to 0.5% [2] - International commodity price fluctuations contributed to significant increases in gold and platinum jewelry prices, which rose by 39.2% and 15.9% respectively, impacting CPI positively [2] - The increase in international oil prices, influenced by geopolitical tensions and seasonal demand, also played a role in lifting domestic energy prices [2][5] Group 3: Core CPI and Consumer Goods - Core CPI has shown a continuous increase for four months, rising from -0.1% in February to 0.7% in June [3] - Prices of durable consumer goods, such as entertainment products and household textiles, increased by 2.0% year-on-year [3] - The decline in automobile prices has slowed, with fuel and new energy vehicles seeing the smallest price drops in nearly two and a half years [3] Group 4: Food Prices and Their Impact - Food prices decreased by 0.3% year-on-year in June, with the decline narrowing compared to the previous month [4] - Fresh fruit prices rose by 6.1%, contributing approximately 0.12 percentage points to the CPI increase [4] - The price of beef turned positive after 28 months of decline, while pork prices fell by 8.5%, marking a shift after previous increases [4] Group 5: PPI Trends and Future Outlook - The Producer Price Index (PPI) fell by 0.4% month-on-month and 3.6% year-on-year, indicating ongoing pressure in the industrial sector [4][5] - Factors such as high temperatures and increased rainfall have affected construction progress, contributing to a decline in raw material prices [5] - Analysts expect that with continued macroeconomic policy support, domestic prices may gradually recover, leading to a mild rebound in CPI and a narrowing of PPI declines [6]

Core Viewpoint - The Consumer Price Index (CPI) has turned from a decline to an increase of 0.1% year-on-year in June, ending a four-month downward trend, influenced by the recovery in industrial consumer goods prices [2][3]. CPI Analysis - In June, the CPI increased by 0.1% year-on-year, with food prices decreasing by 0.3% and non-food prices rising by 0.1% [3]. - The decline in industrial consumer goods prices narrowed from 1.0% to 0.5% year-on-year, reducing its downward impact on CPI by approximately 0.18 percentage points [3]. - International commodity price fluctuations led to significant increases in gold and platinum jewelry prices, which rose by 39.2% and 15.9% respectively, contributing about 0.21 percentage points to the CPI increase [3]. - The core CPI rose by 0.7%, marking a new high in nearly 14 months [3]. PPI and Industrial Prices - The Producer Price Index (PPI) showed a consistent decline in June, but some industries are experiencing price stabilization and recovery due to improved supply-demand relationships [8]. - The construction of a unified national market and increased efforts to combat disorderly low-price competition are contributing to price stabilization in certain sectors [8]. - Prices in the automotive sector, including both traditional and new energy vehicles, have shown signs of recovery, with respective year-on-year declines narrowing [8]. Consumer Demand and Living Costs - The demand for housing rentals has increased during the graduation season, leading to a 0.1% rise in rental prices [6]. - Policies aimed at boosting consumption have led to a rise in prices for daily necessities and clothing, with general daily goods and clothing prices increasing by 0.8% and 0.1% respectively [9]. - High-tech industries are also seeing price increases, with integrated circuit packaging and testing prices rising by 3.1% year-on-year [9].

Group 1 - The core viewpoint of the article highlights the positive shift in the Consumer Price Index (CPI) in June, indicating a recovery in consumer demand and the effectiveness of consumption-boosting policies [4][5][6] - In June, the CPI increased by 0.1% year-on-year after four consecutive months of decline, primarily driven by a rebound in industrial consumer goods prices [5][6][8] - The core CPI, excluding food and energy, rose by 0.7% year-on-year, marking the highest increase in nearly 14 months [8] Group 2 - In June, the Producer Price Index (PPI) decreased by 0.4% month-on-month, with a year-on-year decline of 3.6%, which is a larger drop compared to the previous month [2][11][14] - Factors contributing to the PPI decline include seasonal price drops in raw materials, increased green energy leading to lower energy prices, and downward pressure on prices in export-oriented industries due to global trade slowdowns [12][13][14] - Despite the PPI decline, some industries are experiencing price stabilization and recovery due to improved supply-demand relationships and supportive macroeconomic policies [14][15]