Core Viewpoints - The necessity to enhance domestic demand policies to counteract the potential impacts of slowing external demand, thereby solidifying the recovery of domestic demand since the first quarter [1][4] - The market consensus on a clear mainline for policy response is still awaited, indicating that the timing for a more aggressive market approach is not yet ripe [1][7] Economic Performance - China's GDP growth in the first quarter exceeded expectations, with a year-on-year increase of 5.4% and a quarter-on-quarter increase of 1.2% [2][4] - Retail sales grew by 4.6%, and fixed asset investment (excluding rural households) increased by 4.2% [2] - The urban unemployment rate averaged 5.3%, and per capita disposable income rose to 12,179 yuan, reflecting a nominal increase of 5.5% [2] Trade and External Factors - The trade surplus contributed 2.2 percentage points to the nominal GDP growth in the first quarter, up from 1.9 percentage points in the previous quarter [4] - A decline in container bookings to the U.S. by 67% in the first week of April indicates potential headwinds for exports in the second quarter [4] Investment Strategies - Recommendations to maintain a defensive investment strategy in light of ongoing global uncertainties, with a focus on safe assets such as gold and government bonds [5][21] - Emphasis on sectors benefiting from domestic demand and those that have been undervalued due to market sentiment, particularly in the context of "China Special Valuation" and "Science and Technology Valuation" [6][10] Market Outlook - The market is expected to remain volatile, with a need for further observation of policy impacts before a clear bullish trend can be established [7][19] - The potential for a gradual decrease in funding rates as macroeconomic stimulus measures are anticipated to be implemented [17]

Economic Growth - In Q1, China's GDP grew by 5.4%, exceeding Bloomberg's consensus estimate of 5.0%[3] - Nominal GDP growth was recorded at 4.6%, consistent with Q4 of the previous year[3] - Trade surplus contributed 2.2 percentage points to nominal GDP growth, up from 1.9 percentage points in Q4[3] Industrial Performance - Industrial value-added growth in March rebounded to 7.7%, up from 5.9% in January-February, surpassing expectations[8] - For Q1, industrial value-added growth was 6.5%, an increase from 6.2% in December[8] - Key sectors like railway, shipbuilding, and electrical machinery maintained double-digit growth rates[8] Consumer Activity - Retail sales growth in Q1 reached 4.6%, up from 3.7% in December, driven by policies like "trade-in for new"[10] - In March, retail sales growth accelerated to 5.9%, higher than the expected 4.2%[10] - Online retail sales in March increased to 6.9%, reflecting a recovery in consumer spending[11] Investment Trends - Fixed asset investment growth in Q1 was 4.2%, faster than the 3.2% recorded for the entire year of 2024[12] - Infrastructure investment surged by 11.5% in Q1, with March growth rising to 12.6%[13] - Real estate investment saw a decline of 10% in March, but the rate of decline improved slightly compared to earlier months[14] Employment and Risks - The urban unemployment rate in March slightly decreased to 5.2%, consistent with the previous year's level[15] - Risks include potential escalation of global trade tensions and a downturn in the real estate cycle affecting domestic demand[5][17]