Summary of Conference Call Records Industry or Company Involved - The discussion primarily revolves around the **Chinese economy** and its **social security system**. Core Points and Arguments 1. **Consumer Spending and Expectations**: The current consumer spending is heavily influenced by public expectations. Recent policy changes, such as a 20 RMB increase in pension benefits, amounting to approximately 6 billion RMB, have not significantly boosted consumer confidence or spending [1][2][3]. 2. **Social Security Spending**: Comparatively, China spends about 8% of its GDP on social security, which is lower than the OECD average of 25% and the 15-20% spent by similar developing countries. This indicates potential for increased social security investment in line with the goal of common prosperity [2][3]. 3. **Debt Utilization**: The sustainability of debt is contingent upon its application. If debt is used for social welfare, it can stimulate consumption and break the low-price cycle. Conversely, if used for unproductive capacity expansion, it may lead to bad debts and increased financial risk [3][5]. 4. **Local Government Debt**: Local government debt is reported to be around 70 trillion RMB, while central government debt is approximately 30 trillion RMB. This suggests a theoretical debt capacity of around 100 trillion RMB, indicating that there is still room for borrowing if used wisely [4][5]. 5. **Economic Transition**: The need for a shift from supply-side policies to demand-side policies is emphasized, particularly in light of changing demographics and global economic conditions. This includes enhancing social security for rural workers and flexible employment groups [9][10]. 6. **Global Economic Context**: The global economic outlook is bleak, with many institutions downgrading growth forecasts due to uncertainties stemming from U.S. policies. However, China is seen to have some policy flexibility to mitigate these impacts [11][12]. 7. **Technological Advancements**: There is a growing recognition of China's capabilities in technology and innovation, particularly in AI, renewable energy, and pharmaceuticals. This shift in perception could enhance China's position in the global economy [14][15]. Other Important but Possibly Overlooked Content 1. **Path Dependency Issues**: The historical reliance on supply-side policies has created a path dependency that may hinder the adoption of more effective demand-side strategies. This is compounded by local government incentives tied to GDP output rather than consumer welfare [7][8][9]. 2. **Consumer Confidence**: There is a need to improve consumer confidence to reduce precautionary savings, which is currently a barrier to increased consumption [6][10]. 3. **Policy Implementation**: The effectiveness of new policies aimed at enhancing social security and stimulating consumption will depend on their implementation and the public's perception of their benefits [10][13].

Core Viewpoint - The upcoming tariff "storm" is expected to impact China the most, but the country is also the most prepared for it. The focus of domestic policy in the second quarter is becoming clearer, emphasizing supply control and demand support [2][3]. Group 1: Tariff Impact and Preparation - The investigation results of the "America First Trade Policy" memorandum are anticipated to lead to the highest tariffs and the broadest scope for China. However, Chinese companies have diversified their global presence over the past few years, making them better prepared compared to the shocks experienced in April 2018 [3]. - As of the end of 2023, 49% of Amazon's best-selling sellers are from China, indicating a strong presence in the U.S. retail market. The diversification of U.S. retail has increased, making it unrealistic for retailers to pass on tariff costs entirely to overseas suppliers [3]. Group 2: Domestic Policy Direction - Fiscal spending in the first two months of the year has shifted towards social welfare, with social-related projects increasing by 5.6% year-on-year, while infrastructure spending decreased by 5.6%. This marks the first negative growth in infrastructure spending since 2021 [5]. - The proportion of infrastructure spending is expected to rise from 22.2% to 23.3% by the end of 2024, while social spending will decrease from 43.7% to 42.1% [5]. - The monetary policy is waiting for synchronization with the U.S. to avoid significant currency fluctuations and financial risks. The central bank has indicated potential interest rate cuts to calm the market [6]. Group 3: Market Recovery Expectations - Following the tariff "storm," A-shares are expected to recover, while Hong Kong stocks may undergo a correction. The overseas market's recent volatility is primarily driven by tariff concerns and recession expectations, rather than actual economic downturns [7][8]. - The core operating indicators of major U.S. companies are showing improvement, suggesting that the market may recover after the tariff situation stabilizes [8]. Group 4: Core Asset Resilience - Core assets have demonstrated strong operational resilience, with many companies in the "new core assets" category showing improved performance. As of March 28, 2025, the revenue growth rate for these companies increased to 13.9% in Q4 2024, up from 8.4% in Q3 2024 [10][12]. - The overall revenue growth for non-financial A-shares was only 2.7%, highlighting the relative strength of core assets [12]. Group 5: Investment Strategy - The current investment strategy emphasizes technology-driven growth, supply-side initiatives, and consumption recovery. The focus remains on sectors like AI, domestic computing power, and innovative pharmaceuticals [15][16]. - There is a recommendation to maintain positions in technology while also considering sectors that benefit from insurance capital allocation, such as Hong Kong dividend stocks [16].