Group 1 - The core viewpoint is that the Chinese government is undergoing significant changes in its financing system, with a notable increase in government net financing while city investment bonds (CIB) are experiencing negative net financing [1][2] - In the first half of 2023, the net financing of government bonds reached 7.66 trillion yuan, an increase of 4.32 trillion yuan year-on-year, representing a growth of approximately 129% [1][4] - The net financing of city investment bonds saw a decline of 763.60 billion yuan, a year-on-year decrease of about 149%, indicating a tightening supply of CIBs [1][4] Group 2 - The decline in CIB issuance and negative net financing is a result of stricter regulations aimed at controlling new hidden debts and enhancing oversight of CIBs [2][4] - Despite the decrease in CIB financing, the government still needs to increase debt funding for major project construction to sustain economic growth amid complex internal and external conditions [2] - Infrastructure investment in the first half of 2023 grew by 4.6%, outpacing overall investment growth by 1.8 percentage points, supported by the acceleration of special local government bonds and ultra-long-term special treasury bonds [4] Group 3 - The ongoing transformation of city investment companies is being accelerated, with over 7,000 companies withdrawing from the government financing platform list last year [1] - The report from China Chengxin International indicates that while the pace of debt resolution is increasing, local governments still face significant repayment pressures, and the effectiveness of monetary policy and tools needs continuous observation [4] - The quality of the transformation among city investment enterprises varies, raising concerns about the restructuring of government-enterprise relationships and the potential for increased debt burdens due to "fake transformations" [4]

Investment Rating - The report rates the banking sector as "Outperforming the Market" [1] Core Viewpoints - The banking sector experienced a decline of 1.00% this week, following a previous increase of 3.77% [1][13] - Year-to-date, the banking sector has risen by 16.59%, ranking second among all industries, with a focus on the investment value of bank stocks [1] - Key banks to watch include China Merchants Bank, Agricultural Bank of China, and Jiangsu Bank [1] Summary by Sections Banking Sector and Stock Performance - The A-share banking index fell this week, with 17 out of 42 banks seeing an increase in stock prices [2][12] - State-owned banks had an average increase of 1.08%, while joint-stock banks saw a slight decline of 0.08% [2][15] - Over the past month, state-owned banks increased by 8.98%, while joint-stock banks rose by 9.80% [2][15] Funding Price Situation - The central bank's reverse repo operations decreased, with a net withdrawal of 226.5 billion yuan this week [3][28] - The overnight SHIBOR rate rose to 1.33%, and the 7-day SHIBOR rate increased to 1.48% [3][31] - The average overnight repo rate for deposit institutions was 1.34%, reflecting a rise of 3 basis points [3][31] Bond Market Situation - Total bond market financing reached 17,057.9 billion yuan, with net financing increasing by 2,087.7 billion yuan compared to last week [4][41] - Financial bonds issuance was 4,071.5 billion yuan, up by 2,030.5 billion yuan from the previous week [4][41] - Government bonds saw a rise in yields, with the 1-year yield at 1.37% and the 10-year yield at 1.67% [5][43] Interbank Certificate of Deposit Market Review - The issuance of interbank certificates totaled 4,259 billion yuan, an increase of 1,833 billion yuan from last week [54] - The weighted average issuance rate was 1.61%, down by 1 basis point [54]

Report Industry Investment Rating No relevant content provided. Core View of the Report Through macro - fundamental analysis and technical analysis using tools like the golden ratio line, horizontal line, and moving average, the report predicts the likely trends of today's futures main contracts. It anticipates that stock index futures will show a relatively strong oscillation, while silver, industrial silicon, and polysilicon futures will oscillate with an upward bias. Rebar, iron ore, coking coal, and glass futures will also have a relatively strong oscillation, and crude oil futures will oscillate weakly [1][2]. Summary by Related Catalogs 1. Macro News and Trading Tips - Chinese Premier Li Qiang held talks with Egyptian Prime Minister Madbouly, expressing China's willingness to strengthen development strategy alignment and expand cooperation in emerging fields [8]. - Chinese Vice - Premier Ding Xuexiang met with former US Treasury Secretary Paulson, stating that China is a major stabilizing factor in the world and hopes the US to develop mutually beneficial and stable economic and trade relations [8]. - The Chinese Ministry of Finance interpreted policies restricting EU medical device procurement, with specific budget thresholds and exceptions for EU - funded enterprises in China [8]. - The National Development and Reform Commission's Urban and Small Town Reform and Development Center aims to promote high - quality new urbanization actions [8]. - The Chinese Ministry of Commerce responded to Sino - US negotiations, rumors about Huang Renxun's visit to China, and refuted von der Leyen's remarks on over - capacity [9]. - China's retirees' basic pensions have increased by 2% since January 1, 2025 [9]. - In the first half of this year, local governments issued nearly 1.8 trillion yuan in replacement bonds, and experts suggest continuing debt risk resolution in the second half [9]. - US President Trump urged the Fed to cut interest rates and considered appointing a "shadow chairman" [10]. - The US will impose a 50% tariff on imported copper starting August 1, 2025 [10]. - Fed Governor Waller suggested considering a rate cut in July and reducing the balance sheet [10]. - Fed's Daly believes the Fed may cut rates twice this year, with policy uncertainties [11]. - Fed's Musalem said future inflation expectations may rise due to tariffs [12]. - The US Department of Defense will invest $4 billion in MP Materials [12]. - US initial jobless claims decreased for the fourth consecutive week, while continuing claims remained high [12]. - The Guangzhou Futures Exchange adjusted the price limit and margin standards for polysilicon futures contracts [12]. - International oil prices fell due to concerns about global demand and an unexpected increase in US crude oil inventories [12]. - International precious metal futures generally rose, supported by inflation concerns and central bank gold purchases [13]. - London base metals mostly closed higher, with copper prices showing an oscillatory trend [13]. - OPEC adjusted its global oil demand forecast, and OPEC + is discussing production adjustments [13]. - China's summer grain production was stable in 2025 [13]. - China's auto production and sales increased in June, especially for new energy vehicles [14]. - The on - shore RMB against the US dollar strengthened, and the exchange rate is expected to appreciate further [14]. - The US dollar index rose due to global trade uncertainties [14] 2. Futures Market Analysis and Forecast Stock Index Futures - On July 10, the main contracts of CSI 300, SSE 50, CSI 500, and CSI 1000 stock index futures all showed an upward trend with varying degrees of increase. It is expected that in July 2025, these stock index futures will have a relatively strong oscillation, and on July 11, they will continue this trend with specific resistance and support levels provided [15][19][20]. Treasury Bond Futures - On July 10, the main contracts of 10 - year and 30 - year treasury bond futures both declined. It is expected that on July 11, they will continue to oscillate weakly, with specific resistance and support levels given [40][42][45]. Precious Metal Futures - Gold futures showed an upward trend on July 10. It is expected that in July 2025, the main continuous contract will have a wide - range oscillation, and on July 11, the main contract will oscillate and consolidate. Silver futures had a slight increase on July 10. It is expected that in July 2025, the main continuous contract will oscillate strongly, and on July 11, the main contract will oscillate with an upward bias and may reach new highs [45][46][52]. Base Metal Futures - Copper futures had a slight increase on July 10. It is expected that in July 2025, the main continuous contract will have a wide - range oscillation, and on July 11, the main contract will oscillate and consolidate. Aluminum futures rose on July 10. It is expected that in July 2025, the main continuous contract will oscillate strongly, and on July 11, the main contract will oscillate with an upward bias. Alumina, zinc, industrial silicon, and polysilicon futures all showed upward trends on July 10, and it is expected that on July 11, they will continue to oscillate with an upward bias [55][61][66]. Energy and Chemical Futures - Crude oil futures had a slight increase on July 10. It is expected that in July 2025, the main continuous contract will oscillate strongly, but on July 11, the main contract will oscillate weakly. PTA and methanol futures are expected to oscillate weakly on July 11, while PVC and soda ash futures are expected to oscillate and consolidate and may attack resistance levels [7][102][108]. Building Materials and Metals Futures - Rebar, hot - rolled coil, iron ore, coking coal, glass, and soda ash futures all showed upward trends on July 10. It is expected that on July 11, rebar, hot - rolled coil, iron ore, coking coal, and glass futures will continue to oscillate with an upward bias, and soda ash futures will oscillate and consolidate and may attack resistance levels [4][82][90]. Lithium Carbonate Futures - Lithium carbonate futures had a slight decline on July 10. It is expected that on July 11, it will oscillate with an upward bias and may attack resistance levels [79].

Core Viewpoint - Local government debt risks have become a significant concern, necessitating a dual challenge of resolving existing debt and restructuring financing models under the constraints of "preventing defaults" [1] Group 1: Project Selection Logic - Incremental projects by urban investment platforms must align with both "serving local functions" and "market-driven revenue generation" [2] - Projects should anchor on national strategic directions such as "Yellow River Basin ecological protection" and "rural revitalization," which attract policy resources and funding [2] - A closed-loop revenue model must be established during the feasibility study phase, exemplified by affordable housing projects that combine commercial space to cover construction costs [3] - Urban investment companies need to transition from "infrastructure builders" to "urban operators," integrating various public utility services to ensure stable revenue streams [4] Group 2: Funding Source Optimization - A mixed funding model of "policy funds as a base + market financing as a supplement" is essential under tight fiscal constraints [5] - Innovative debt instruments and capital raising strategies are necessary, such as leveraging special bonds and policy financial loans to achieve a leverage ratio of 1:5 [5] Group 3: Avoiding Hidden Debt - Breaking the "fiscal dependency inertia" is crucial to avoid new hidden debts, which involves redefining the responsibilities between government and enterprises [6] - Techniques such as market-driven decision-making and cash flow packaging can help mitigate direct fiscal support and reduce the risk of hidden debt recognition [7][8] - Utilizing gray areas in policies, such as indirect fiscal payments and transforming specific project subsidies into broader industry policies, can further reduce hidden debt risks [8] Group 4: Risks and Outlook - While current practices have shown some success, potential risks remain, including regulatory scrutiny and the sustainability of market-driven revenues [9] - Future reforms should focus on balancing risk prevention and growth stabilization, requiring both technical innovations and deeper fiscal reforms [9]

Fiscal Policy Overview - The fiscal policy for 2025 is more proactive, with a deficit rate reaching approximately 4%, the highest since the implementation of active fiscal policies in 2008, reflecting a strong commitment to economic recovery[2] - The total deficit scale is set at 5.66 trillion, significantly higher than last year's 1.6 trillion, indicating a substantial increase in fiscal spending[2] - Special bonds are planned at 4.4 trillion, exceeding last year's 500 billion, while the issuance of ultra-long special government bonds will increase to 1.3 trillion, up from 300 billion last year[2] Economic Impact - The increase in the deficit, special bonds, and ultra-long bonds collectively amounts to 11.86 trillion, surpassing last year's total of 8.96 trillion by 2.9 trillion, indicating a robust fiscal stimulus[2] - The 1.3 trillion ultra-long bonds, 500 billion special bonds, and 4.4 trillion special bonds correspond to an increase in the deficit rate by 0.9, 0.4, and 3.1 percentage points respectively, leading to an overall deficit rate of 8.4% for 2025, higher than last year's 6.6%[2] Policy Objectives - The proactive fiscal policy aims to expand total demand, optimize supply structure, stabilize expectations, and mitigate economic risks, particularly in real estate and finance[3] - The government emphasizes the importance of enhancing transfer payments to local governments, ensuring basic public services, and alleviating fiscal pressures at the grassroots level[12] Structural Reforms - The report highlights the need for deepening fiscal and tax reforms, including zero-based budgeting and consumption tax reforms, to improve fiscal efficiency and support high-quality development[16] - The focus on optimizing fiscal expenditure structure aims to increase efficiency and effectiveness, with a notable rise in spending on healthcare, education, and social security, which accounted for 39.7% of the general public budget in 2024, up 4.4 percentage points from 2013[14]