Core Insights - The article discusses the transition into a "new phase" of transformation and a "reform period" for policies, questioning whether external shocks are obstacles or opportunities [5] - It highlights the end of the "American exceptionalism" narrative as a significant expectation gap in the first half of the year [8] - The impact of tariffs on the U.S. economy is identified as a major contradiction for the second half of the year, with a focus on inflation trends [9] Deep Dive Topics - The mid-year outlook emphasizes the need for new changes in policies, particularly regarding U.S. tariffs, tax cuts, and monetary policy, as domestic export data enters a "verification period" [11] - The article explores the emergence of new policy financial tools aimed at stabilizing growth, suggesting that these tools are becoming increasingly relevant [12][14] - The booming inbound tourism sector is analyzed, noting the expansion of visa-free access for additional countries, which is expected to have significant macroeconomic implications [15] High-Frequency Tracking - The article notes a shift in export strategies, with a transition from targeting emerging markets to focusing on the U.S. market [17] - It identifies three characteristics of stabilizing core CPI based on May inflation data [19] - The upcoming second round of U.S.-China trade negotiations is highlighted, with stronger-than-expected U.S. non-farm employment data [22] Policy Updates - Recent communications between Chinese President Xi Jinping and U.S. President Trump emphasize the importance of maintaining a cooperative relationship and mutual respect [27][28] - The article discusses the implications of ongoing trade negotiations with various countries, including Canada, the EU, and Mexico, and their potential outcomes [23]

Core Viewpoints - The improvement in consumer demand stabilizes the core CPI, but supply-side factors significantly suppress inflation readings [3][72] - The core commodity PPI shows a notable rebound primarily due to demand improvement, with tariff impacts on prices not intensifying [3][72] - The overall CPI aligns with market expectations, with food supply showing a mixed performance leading to a slight decline in food CPI [28][74] Group 1: Core CPI Characteristics - Characteristic 1: The core commodity PPI rebounded by 0.3 percentage points to -1.4% YoY, driven by sustained effects of consumption policies and a moderation in tariff impacts [3][72][8] - Characteristic 2: The core commodity CPI increased by 0.1 percentage points to 0.2% YoY, supported by consumption policies and rising gold prices, with gold jewelry prices up 40.1% YoY [19][73] - Characteristic 3: The service CPI rose by 0.2 percentage points to 0.5% YoY, aided by an increase in holiday days, which enhanced service demand [22][61] Group 2: Future Outlook - The combination of policy reinforcement and recovery in domestic demand is expected to alleviate inflationary pressures, although supply-side changes may still impose constraints on price readings [5][74] - Continued emphasis on policies to boost service consumption may further improve core service CPI, while the "old-for-new" policy could support core commodity CPI and PPI [5][74] - Despite these positive factors, low capacity utilization in downstream sectors and uncertainties regarding tariffs may still limit price recovery [5][74] Group 3: Regular Tracking - The CPI remained flat YoY, with improvements in both core commodity and core service CPI [38][74] - The PPI continued to decline, with a YoY drop of 0.6 percentage points to -3.3%, particularly in production materials [38][74] - Food CPI showed a slight decline due to mixed supply conditions, with fresh fruits and fish prices rising while seasonal vegetables saw price drops [28][74]

Core Viewpoints - The improvement in consumer demand stabilizes the core CPI, but supply-side factors significantly suppress inflation readings [3][68] Group 1: Key Features of Core CPI Stabilization - Feature 1: The core commodity PPI shows a significant rebound, primarily due to improved demand and a lack of further tariff impacts. In May, the core commodity PPI increased by 0.3 percentage points to -1.4% [3][68] - Feature 2: Consumption promotion policies combined with rising gold prices lead to an increase in core commodity CPI. In May, the core commodity CPI rose by 0.1 percentage points to 0.2% [4][19] - Feature 3: The increase in holiday days in May allows for a more substantial release of service demand, pushing the core service CPI higher. The service CPI rose by 0.2 percentage points to 0.5% in May [4][22] Group 2: Outlook and Regular Tracking - The combination of policy reinforcement and recovery in domestic demand is expected to alleviate inflationary pressures, but supply-side changes must be monitored for their impact on price readings [5][33] - The overall CPI in May was -0.1%, slightly better than market expectations, with food supply showing a mixed performance [5][27] - The non-food CPI saw improvements in transportation and communication, while fuel prices for transportation significantly declined [51][71]

Core Viewpoints - The improvement in consumer demand stabilizes the core CPI, but supply-side factors significantly suppress inflation readings [2][68] Group 1: Characteristics of Core CPI Stabilization - Characteristic 1: Core commodity PPI shows a notable rebound, primarily due to improved demand and a lack of further tariff impacts. In May, the core commodity PPI increased by 0.3 percentage points to -1.4%. This is attributed to the sustained effects of consumption-boosting policies and a moderation in tariff impacts on prices [2][68] - Characteristic 2: Consumption promotion policies combined with rising gold prices lead to an increase in core commodity CPI. In May, the core commodity CPI rose by 0.1 percentage points to 0.2%, supported by increased consumer demand and a 40.1% rise in gold jewelry prices [3][18] - Characteristic 3: The increase in holiday days in May allowed for more substantial service demand release, positively impacting core service CPI, which rose by 0.2 percentage points to 0.5% [3][21] Group 2: Future Outlook - The combination of policy reinforcement and recovery in domestic demand is expected to alleviate inflationary pressures, although supply-side changes may still impose constraints on price readings [4][32] - The focus on boosting service consumption is likely to improve core service CPI further, while the ongoing "old-for-new" policy may provide significant support to core commodity CPI and PPI [4][70] Group 3: Regular Tracking - The overall CPI in May was -0.1%, slightly better than market expectations, with food supply showing a mixed performance. Fresh fruit and fish prices increased due to supply reductions, while seasonal vegetables saw a price drop [5][26] - Non-food CPI showed improvement in transportation and communication, while fuel prices for transportation saw a significant decline [50][71] - Service CPI in May reflected a recovery in demand, with core service CPI performing better than in previous years, indicating a positive trend in the service sector [58][71]