Report Summary - The new Yalta system has been substantially established, with the global governance plan divided into two parts: the US's "New Monroe Doctrine" leads to strategic contraction, while China's "Community with a Shared Future for Mankind" emphasizes unity with Southern countries [1]. - In the bipolar world order, five global trends are worth noting: supply chain regionalization, debt - driven growth, political right - shift in the Western world, the decline of the US dollar hegemony, and the decreasing strategic significance of the First Island Chain and the First Continental Chain. Long - term optimism is held for precious metals and industrial metals, and pessimism for the US dollar [2]. - In 2026, three macro - events need attention: Sino - US economic and trade relaxation, the potential end of the Russia - Ukraine war, and the US mid - term elections. For China, exports may still be the economic highlight [3]. Group 1: Evolution of the Yalta System - After WWI, the global political pattern evolved through four stages: the "Versailles System" (1919 - 1939), the "Yalta System" (1945 - 1991), the "Post - Yalta Era" (1991 - 2024), and the "New Yalta System" starting from 2025 [19][23][25]. - The new Yalta system is characterized by the division of governance between China and the US. The US has shifted from strategic expansion to strategic contraction, and the global governance plan has changed from one in the old Yalta system to two [33][36]. Group 2: US Strategic Contraction - The US officially entered the strategic contraction phase during Trump's first term. Trump's "America First Strategy" is a return to realism and the protection of national interests [41]. - The meaning of G2 has changed. In the Obama era, it implied a "subordinate relationship" between the US and China, while in the Trump era, it implies a more "divide - and - rule" approach [49]. - Trump is more like Nixon than Reagan as he tries to seize power from Wall Street financial capital. He pretends to be like Reagan to gain capital support [54]. - Although Trump may cause political and social unrest in the US, he is unlikely to become the US's Gorbachev. If he changes the US's economic foundation, he may be a "hero" for the US [56]. - Trump's actions have led to the deterioration of the US's internal order, including the qualitative change of the two - party system, the failure of the separation of powers, and the continuous testing of the president's power boundaries [61][64]. - Trump's "New Monroe Doctrine" has led to the reconstruction of the global order. The US focuses on domestic affairs, strongly controls neighboring countries, maintains a surface - level control over Latin America, and retreats from Western Hemisphere allies [70]. Group 3: Long - term Trends in the Bipolar World - Supply chain regionalization will lead to one pole being unable to get out of inflation and the other out of deflation [84]. - The global economy will enter a debt - driven growth phase, with fiscal expansion as a long - term trend. Monetary policy will become subordinate to fiscal policy [87]. - The political spectrum in the Western world has shifted to the right since 2021, while the Eastern camp remains relatively stable [95]. - The US dollar hegemony is in decline. The US is trying to solve the US debt liquidity problem by issuing US debt stablecoins, but this may lead to the collapse of the US dollar credit in the long run [103]. - The strategic significance of the First Island Chain and the First Continental Chain is decreasing, and the economic integration of Northeast Asia is irresistible [111]. Group 4: Key Macro - events in 2026 - There will be a one - year window period for Sino - US economic and trade relaxation. The US will accelerate the independence of rare earth and chip supply chains, and China will accelerate the autonomy of high - end chip supply chains [3]. - The Russia - Ukraine war may end, with the US and Russia jointly reaping benefits from Ukraine. Russia's possible entry into the G8 does not necessarily mean it is unfavorable to China [3]. - In the US mid - term elections, the president's party is likely to lose the House of Representatives, which will hinder policy implementation and intensify partisan opposition [3]. - For China, exports may still be the economic highlight in 2026, driven by the repair of the trade environment, European re - armament, and post - war reconstruction in Russia and Ukraine [3]. Group 5: Asset Judgments - Long - term optimism is held for precious metals and industrial metals, and pessimism for the US dollar. A cautious view is taken on oil prices [117].

Core Insights - The article discusses the intense AI arms race led by major tech companies like Microsoft and Google, which have invested a total of $380 billion in key infrastructure such as data centers and AI chip development this year [1] - Despite the aggressive expansion, market sentiment is shifting, highlighted by Nvidia's stock volatility, which saw a drop of 3.9% on November 4, resulting in a market value loss exceeding 1.4 trillion RMB [1][3] - The article raises concerns about whether the massive investments in AI are creating a new bubble and the potential for a chain reaction if fear spreads among investors [1] Group 1: Nvidia's Influence on the Market - Nvidia's stock price fluctuations are now seen as a barometer for the entire U.S. stock market, with its third-quarter revenue exceeding expectations leading to a market rally, while subsequent sell-off announcements from major institutions caused significant declines [3] - Analysts indicate that the U.S. stock market has become overly reliant on a few leading companies like Nvidia to deliver strong earnings for overall market stability, suggesting a deviation from healthy market dynamics [3] Group 2: AI Bubble Risks - Historical patterns show that market bubbles often arise from value deviation, emotion-driven behavior, and risk accumulation, with the current AI arms race contributing to these risks [5] - Goldman Sachs predicts that capital expenditures for leading AI firms will reach $1.4 trillion between 2025 and 2027, with over $400 billion expected in 2025 alone, yet many companies, including OpenAI, are experiencing significant losses [5] - The U.S. tech sector is developing a "debt-driven growth" model, with over $200 billion in AI-related bonds expected to be issued by 2025, creating a potentially risky financial cycle [5] Group 3: China’s Position in the AI Landscape - There are notable differences in valuation and development paths between the U.S. and China in the AI sector, with Chinese companies being viewed as undervalued compared to their U.S. counterparts [7][8] - The U.S. focuses on a "technology-driven" approach, heavily investing in general artificial intelligence (AGI), while China adopts a more pragmatic "application-driven" strategy, emphasizing the synchronization of technology deployment and commercial returns [8] - China's advancements in AI chips, open-source ecosystems, and industry applications position it to withstand external risks and potentially gain a favorable position in the global AI industry restructuring [8]

Core Viewpoint - The dialogue between the chief economists of Zhongtai Securities highlights the core issues of China's economic growth model, emphasizing the shift from debt-driven growth to structural optimization [1] Group 1: Debt-Driven Growth - The past few decades have seen China relying on a debt-driven growth model, which is easy to understand despite its technical terminology [1] - The investment returns have diminished as the economy has developed, leading to a shift from an early target of "maintaining 8% growth" to a current target of "maintaining 5%" [3] - To achieve growth targets, China relies on the "three drivers" of investment, consumption, and exports, with investment becoming the most direct choice due to the challenges in boosting consumption and the uncertainties in exports [4][6] Group 2: Debt Accumulation and Economic Impact - From 2019 to 2023, local government debt has increased at a rate three times that of GDP growth, indicating a concerning trade-off between debt and economic growth [6][8] - The macro leverage ratio has exceeded 300%, surpassing that of developed countries like the U.S., raising concerns about the sustainability of this debt-driven model [8] - Many infrastructure projects have been built, but their utility is questionable, as some areas do not generate sufficient traffic to justify the investments [10] Group 3: Consumer Income and Spending - Only 20% of every dollar invested translates into resident income, which limits the potential for consumption growth [11] - Despite a decent GDP growth in the first half of the year, consumption has not increased correspondingly, highlighting a fundamental issue in the economic structure [11] - Policies aimed at boosting consumption, such as trade-in programs, often fail to benefit lower-income groups and can lead to price increases by manufacturers [13] Group 4: Service Sector Potential - The service sector has significant potential for growth and employment, with the U.S. absorbing over 80% of its workforce in services, compared to less than 50% in China [16] - Easing restrictions on the service sector could stimulate consumption among wealthier individuals, which in turn could create jobs for lower-income groups, fostering a positive economic cycle [18] - Optimizing fiscal spending towards healthcare, education, and direct consumer vouchers may yield more tangible benefits than direct cash transfers [18] Group 5: Economic Transition - Relying on debt for infrastructure development is becoming increasingly unsustainable, necessitating a shift towards consumption-driven growth [19][21] - Adjusting the economic structure to make consumption the primary driver of growth is essential for sustainable development [21] - The ultimate goal of economic development is to improve the quality of life for citizens, which requires careful resource allocation and addressing various challenges in the transition process [22]