1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The GDP growth target of 5% in 2025 was successfully achieved, but the growth rate declined quarter - by - quarter. The macro - economic data in December continued to fall, and the recovery momentum remained weak. Consumption, fixed - asset investment, and the real estate market were sluggish, while exports showed resilience and inflation data improved [3]. - A rational and objective view of the current macro - economy is needed. The transformation, adjustment, and bottoming - out of the real estate market require time, and the domestic economic recovery cannot be achieved overnight. More active macro - policies should be implemented to expand domestic demand and optimize supply [4]. - In the future, "expanding domestic demand and combating cut - throat competition" will remain important long - term policy measures. The financial market is in a state of "weak reality, strong expectation", and the market sentiment is continuously improving. In 2026, the macro - economy and asset prices are expected to continue the upward repair trend, but patience is required [4]. 3. Summary by Directory 3.1 Manufacturing PMI: A Slight Rebound but Still Weak - In December, the manufacturing PMI was 50.1%, up 0.9 percentage points from the previous month, entering the expansion range. Large - scale enterprises' PMI was 50.8%, up 1.5 percentage points; medium - sized enterprises' PMI was 49.8%, up 0.9 percentage points; small - sized enterprises' PMI was 48.6%, down 0.5 percentage points [6]. - Among the five sub - indices of the manufacturing PMI, the production index, new order index, and supplier delivery time index were above the critical point, while the raw material inventory index and employment index were below it. The production and new order indices increased, indicating accelerated production and improved market demand, but the employment index declined slightly [6]. - Overall, although the manufacturing PMI rebounded in December, the manufacturing sector was still weak, and the economic recovery momentum was insufficient [9]. 3.2 CPI and PPI: Inflation Continued to Improve - In December 2025, the national CPI rose 0.8% year - on - year and 0.2% month - on - month. Food and non - food prices both increased, and among the eight major categories of prices, five increased and two decreased year - on - year [10]. - The PPI decreased 1.9% year - on - year in December, with the decline narrowing by 0.3 percentage points, and increased 0.2% month - on - month, with the growth rate expanding by 0.1 percentage points. The anti - cut - throat competition policy has achieved continuous results, and the PPI year - on - year growth rate is expected to turn positive in 2026 [12][15]. 3.3 Import and Export: Maintaining Resilience - In December, China's imports denominated in US dollars increased 5.7% year - on - year, and exports increased 6.6% year - on - year, both exceeding expectations. The trade surplus was 1,141.4 billion US dollars [16]. - Since the second quarter, exports have been stronger than expected, showing strong resilience. The real risk for China's foreign trade lies in the potential economic recession in the US and the slowdown of global economic growth [18]. - In December, China's exports to regions other than the US maintained steady growth, and exports to ASEAN countries continued to replace those to the US [19]. 3.4 Credit: Weak Resident Credit Demand and Declining M1 Growth - At the end of 2025, the stock of social financing scale was 442.12 trillion yuan, a year - on - year increase of 8.3%. The annual increment of social financing scale was 35.6 trillion yuan, 3.34 trillion yuan more than the previous year [20][21]. - In December, resident short - term and long - term loans both decreased significantly, indicating weak resident consumption and housing credit demand. Government bond issuance slowed down, M1 growth declined, but enterprise credit improved and M2 growth rebounded [24][25]. - Overall, the credit demand of the real economy was still weak, and the upward trend of M1 and M2 growth faced resistance [26]. 3.5 Industrial Production, Consumption, and Investment: Industrial Production Rebounded, while Consumption and Investment Growth Continued to Decline - In December 2025, the added value of large - scale industrial enterprises increased 5.2% year - on - year and 0.49% month - on - month. For the whole year of 2025, it increased 5.9% compared with the previous year [27]. - In December, the total retail sales of consumer goods increased 0.9% year - on - year. After excluding the impact of national subsidies, consumption in 2025 was weak, indicating insufficient domestic demand. Further consumption - promotion policies may be introduced in 2026 [27][28]. - In 2025, the national fixed - asset investment (excluding rural households) decreased 3.8% year - on - year. The growth rates of manufacturing investment, infrastructure investment, and real estate development investment all continued to decline [32]. 3.6 Real Estate Market: Continued Downtrend - In 2025, the sales area and sales volume of newly built commercial housing decreased by 8.7% and 12.6% respectively year - on - year. The real estate development investment decreased 17.2% year - on - year [31][32]. - The new construction, construction, and completion of real estate all declined further. The real estate development climate index continued to fall in December [35][36]. - The real estate market is currently at the bottom stage. With the decline of the base, the year - on - year decline of sales area and sales volume is gradually narrowing. The first half of 2026 is expected to be a critical period for the real estate market to stop falling and stabilize [38]. 3.7 Summary and Outlook - In December, the macro - economy was weak, with consumption, fixed - asset investment, and the real estate market remaining sluggish, while exports were resilient and inflation data improved [40]. - The main constraints on macro - economic recovery and asset price repair are insufficient domestic effective demand represented by real estate and consumption, and over - capacity in multiple industries. More policy support is needed [40]. - The financial market is in a state of "weak reality, strong expectation". In 2026, the macro - economy and asset prices are expected to continue the upward repair trend, but one should track policy implementation details and wait for positive macro - economic signals [40].

Core Viewpoint - The financial data from various provinces in China reveals a stark contrast in household savings and loan behaviors, indicating a growing tendency for residents to save more while showing reluctance to borrow, reflecting a cautious consumer sentiment that still needs to be restored [1][7]. Group 1: Household Savings - Household deposits in five provinces have shown a significant increase, with growth rates reaching 8% to 9%, indicating a strong saving enthusiasm among residents [2][5]. - As of the end of 2025, Guangdong's household deposit balance reached 15.12 trillion yuan, an increase of 1.29 trillion yuan from the beginning of the year, with a growth rate of 9.34% [2]. - Zhejiang's household deposits also increased significantly, reaching 11.85 trillion yuan, with a growth rate of nearly 10% [2][3]. - The national household deposit balance was reported at 167 trillion yuan, with a year-on-year growth of 9.71%, translating to an average per capita deposit of 118,900 yuan [5]. Group 2: Deposit Composition - The trend towards fixed-term deposits remains strong, with fixed-term deposits accounting for 73.3% of total household deposits nationally, as residents prefer to lock in long-term returns amid declining interest rates [5][6]. - In Guangdong, the proportion of demand deposits decreased to 42.91%, while fixed-term deposits increased to 57.09% [6]. Group 3: Household Loans - Both Guangdong and Zhejiang have experienced a contraction in household loans, particularly in short-term loans, indicating a cautious approach to borrowing among residents [7][9]. - In Guangdong, household loans decreased by 47.18 billion yuan year-on-year, with short-term loans down by 1.14 trillion yuan [7]. - Similarly, in Zhejiang, household loans saw a slight decline of 60.49 billion yuan, with short-term loans decreasing by 1.49 trillion yuan [7]. Group 4: Corporate Loans - In contrast to household loans, corporate loans have shown robust growth, with Guangdong's corporate loan balance increasing by 1.34 trillion yuan, a year-on-year increase of 5.36% [9]. - Zhejiang's corporate loans also grew significantly, with an increase of 1.91 trillion yuan, reflecting a year-on-year growth of 12.44% [9]. - The increase in corporate loans is attributed to improved demand for inventory and production expansion, supported by favorable policies and financial tools [9].

Group 1: Market Risks - The return of market volatility has led to increased discussions about potential risks that could end the current bull market, including significant investments in AI, the health of consumer credit, and signs of stress in the corporate sector [1] - JPMorgan's internal discussions indicate that their trading team is closely monitoring the sustainability of AI capital expenditures, rising auto loan delinquency rates, and credit asset write-downs at some banks [1] - Despite these concerns, JPMorgan currently views these risks as "tail risks" and not systemic threats, suggesting that recent fluctuations in consumer and corporate credit are more a normalization towards pre-pandemic trends rather than signs of systemic deterioration [1] Group 2: AI Investment and Financing Gap - The surge in AI investment is driving remarkable capital expenditures, with projections indicating that data center spending will grow from approximately $600 billion in FY2025 to between $3 trillion and $4 trillion by 2030 [2] - JPMorgan analyst Nikos believes this scale of spending is "manageable," as the tech sector can potentially cover these expenditures through internally generated cash flow, although this may require halting stock buybacks and dividend payments [2] - If tech companies continue to prioritize shareholder returns, the market could face a financing gap of approximately $1.6 trillion by 2030 [2] Group 3: Consumer Credit Trends - Concerns have arisen regarding a report stating that auto loan delinquency rates have increased by 50% since 2010; however, JPMorgan analysts argue that this increase is from a low of about 1% to 1.6%, while other categories of consumer credit have declined during the same period [4][5] - The current debt repayment burden for American households is approximately 11.25% of disposable income, which is lower than the 11.73% recorded in Q4 2019 and significantly below the peak of 15.85% in Q4 2007 [6] Group 4: Corporate Credit Health - The health of the corporate sector is also a focal point, with recent asset write-downs, such as Zion Bancorp's $60 million write-down, raising market concerns [8] - JPMorgan's credit trading department views recent credit "blow-up" events as more indicative of a return to trend rather than the onset of systemic issues [8] - Strategist Eric Beinstein anticipates that credit spreads will widen by the end of the year, with investment-grade (IG) spreads increasing by 6 basis points and high-yield (HY) spreads by 35 basis points, although current default rates remain significantly below historical averages [10]