Domestic Economic Data - The first phase of anti-involution may lead to a decline in the operating rate of the midstream sector to levels seen in the past two years, with a noticeable adjustment already occurring [1][3] - Since July, the sales of commercial housing in 30 major cities have consistently been lower than last year [1][3] - The sharp drop in port throughput in the first week of August indicates the end of the export rush that began in July [1][3] Asset Market Insights - Liquidity may be approaching a short-term bottleneck, with DR007 currently at around 1.45%, indicating short-term pressure on liquidity-sensitive assets [1][3] - The market generally expects the Federal Reserve to restart interest rate cuts in the second half of the year, which may not be followed by China [1][3] - As the China-U.S. interest rate differential narrows and the PPI year-on-year bottoms out, domestic assets may shift from a barbell strategy to focus on inflation and domestic demand [1][3] Overseas Economic Developments - On August 7, Trump nominated Stephen Moore to the Federal Reserve Board, indicating a potential MAGA trend within the Fed, which could pave the way for future rate cuts [2][4] - Recent dovish statements from Federal Reserve officials suggest that if the July CPI meets market expectations, a hint of rate cuts may be given at the Jackson Hole global central bank meeting on August 21-23 [2][4] - The market has already fully priced in a 25 basis point rate cut at the September FOMC meeting [2][4] Trade and Inflation Data - In July, China's exports were valued at $321.78 billion, a year-on-year increase of 7.2%, while imports were $223.54 billion, up 4.1%, resulting in a trade deficit of $98.24 billion, which is a 14.93% increase year-on-year [9][10] - The CPI for July was flat year-on-year at 0.0%, while the PPI fell by 3.6% year-on-year, indicating ongoing deflationary pressures in the industrial sector [10] Monetary Market Overview - The overall liquidity remained loose, with the benchmark interest rate rising by approximately 0.09 basis points [12] - The average weekly value of DR001 decreased by 5.586 basis points to 1.3142%, while DR007 fell by 8.246 basis points to 1.4457% [13] - Government bond issuance pressure has significantly decreased, with a planned issuance of 351.43 billion yuan next week, down from 634 billion yuan this week [14]

Core Viewpoint - The report indicates that the market generally expects the Federal Reserve to restart interest rate cuts in the second half of the year, which may improve the misalignment of monetary policy cycles between China and the U.S. and lead to a narrowing of interest rate differentials [1] Group 1: Monetary Policy Insights - The People's Bank of China (PBOC) has not mentioned "timely reserve requirement ratio cuts or interest rate cuts" in the recent Politburo meeting, suggesting that China may not follow the Fed's rate cuts in the second half of the year [1] - Currently, the DR007 is at its lower limit, indicating potential short-term pressure on liquidity-sensitive assets [1] Group 2: Future Outlook - Looking ahead, if the interest rate differentials between China and the U.S. narrow and the RMB appreciates, combined with a year-on-year bottoming out of the Producer Price Index (PPI), domestic assets may gradually shift from a "dumbbell strategy" to focus on inflation and domestic demand [1]

Core Viewpoint - The People's Bank of China (PBOC) emphasizes that China does not seek to gain international competitive advantages through currency devaluation, maintaining a clear and consistent stance on exchange rate policy, which prioritizes market determination and aims to keep the RMB stable at a reasonable equilibrium level [1][2]. Economic Stability - Domestic economy shows signs of recovery, with a GDP growth of 5.4% year-on-year in the first quarter, indicating a positive start to the year [1]. - The Central Political Bureau of the Communist Party of China has made important deployments for economic work, suggesting a continuation of high-quality economic development [1]. Monetary Policy Expectations - There is a growing market expectation that the Federal Reserve will resume interest rate cuts in the second half of the year, which may improve the alignment of monetary policy cycles between China and the U.S. and narrow the interest rate differential [1]. Balance of Payments - The current account surplus is projected to be 2.2% of GDP in 2024, indicating a balance within a reasonable range [2]. - China's financial market is operating stably, with steady progress in opening up, making RMB assets attractive, and facilitating orderly cross-border capital flows, with a net inflow of approximately $100 billion in the first five months of the year [2]. Foreign Exchange Market Development - Significant progress has been made in the development of the foreign exchange market, with more mature market participants and rational trading behaviors, enhancing market resilience [2]. - The hedging ratio for enterprises and the proportion of RMB cross-border receipts in goods trade have both increased to around 30%, indicating improved capacity for enterprises to respond to external shocks [2].

Group 1 - The Central Committee of the Communist Party of China has issued opinions to strengthen judicial work in the new era, emphasizing severe punishment for financial crimes such as market manipulation, insider trading, illegal fundraising, loan fraud, and money laundering [1] - To maintain ample liquidity in the banking system, the People's Bank of China will conduct a 1.4 trillion yuan reverse repurchase operation using a fixed quantity, interest rate bidding, and multiple price levels starting from July 15, 2025 [1] - The Deputy Governor of the Central Bank, Zou Lan, stated that structural monetary policy tools will focus on supporting technological innovation and boosting consumption, with an improvement in the misalignment of monetary policy cycles between China and the US expected in the second half of the year, leading to a narrowing of interest rate differentials [1] Group 2 - Ganfeng Lithium expects a net loss of 300 million to 550 million yuan for the first half of the year, while Tianqi Lithium anticipates a net profit of 0 to 155 million yuan, marking a turnaround from losses [2] - Xiangyang Bearing is projected to have a net loss of 13 million yuan for the half-year period, and Jingyuntong expects a net loss of 165 million to 225 million yuan [2] - Greenland Holdings anticipates a net loss of 3 billion to 3.5 billion yuan for the first half of the year, while Zhongyan Chemical reports an 88% year-on-year decline in net profit [2] - Tongwei Co. expects a net loss of 4.9 billion to 5.2 billion yuan, and JA Solar anticipates a net loss of 2.5 billion to 3 billion yuan for the first half of the year [2] - Longi Green Energy expects a net loss of 2.4 billion to 2.8 billion yuan, showing a reduction in losses compared to previous periods [2] - Lianhuan Pharmaceutical anticipates a net loss of 38 million to 45 million yuan for the first half of the year [2]

Core Viewpoint - The article discusses the current state and future direction of China's monetary policy, emphasizing the stability of the RMB exchange rate and the expected improvements in the alignment of monetary policy cycles between China and the US, as well as the focus on supporting key sectors like technology innovation and consumption. Group 1: Monetary Policy Overview - The RMB exchange rate remains stable with a solid foundation due to the improving domestic economy [1] - The expectation of the Federal Reserve restarting interest rate cuts in the second half of the year will help narrow the interest rate differential between China and the US [2] - Recent years have seen a supportive monetary policy environment, with multiple reductions in reserve requirements and interest rates [3] Group 2: Future Monetary Policy Direction - The effects of previously implemented monetary policies will continue to manifest over time, with a commitment to maintaining a moderately loose monetary policy [4] - Structural monetary policy tools will focus on supporting technology innovation and boosting consumption, enhancing the effectiveness of economic restructuring and transformation [5][6] Group 3: Financial Support for Key Areas - The People's Bank of China (PBOC) will enhance financial services for the real economy, ensuring liquidity remains ample and aligning monetary supply growth with economic growth targets [7] - Emphasis will be placed on supporting private and small enterprises, improving the financial support system, and increasing the availability of financing for these sectors [8]