Investor Presentation | Asia Pacific M Foundation 中国新篇章：科技与再平衡 This translated report is made available for convenience only and is excerpted from the original research report published in English. In the event of any discrepancy between the translation and the original research report, the content in the original research report will prevail. The original research report can be found here: Investor Presentation: China's Next Chapter: Tech and Rebalancing (12 Nov 2025). 本翻译报告仅供参考之便，摘自以英文发表的原版研究报告。如果翻译与原版研 究 ...

经济再平衡，温和再通胀 —— 2026 年宏观经济展望 首席经济学家：章俊 宏观分析师：张迪、许冬石、詹璐、吕雷、于金潼、赵红蕾、铁伟奥、路自愿 www.chinastock.com.cn 证券研究报告 请务必阅读正文最后的中国银河证券股份有限公司免责声明 宏观专题报告 经济再平衡，温和再通胀 ——2026 年宏观经济展望 2025 年 11 月 19 日 分析师 章俊 首席经济学家 ：010-8092-8096 ：zhangjun_yj @chinastock.com.cn 分析师登记编码：S0130523070003 张迪 ：010-8092-7737 ：zhangdi_yj@chinastock.com.cn 分析师登记编码：S0130524060001 许冬石 ：010-8357-4134 ：xudongshi@chinastock.com.cn 分析师登记编码：S0130515030003 詹璐 ：0755-8345-3719 ：zhanlu @chinastock.com.cn 分析师登记编码：S0130522110001 吕雷 ：010-8092-7780 ：lvlei_yj@chinastoc ...

Summary of Key Points from the Conference Call Industry Overview - The conference call discusses the "15th Five-Year Plan" (十五五) in China, focusing on the transition from quantity to quality in industrial policy, emphasizing industrial ecology, cutting-edge standards, AI integration, and the reduction of traditional subsidies [1][3][8]. Core Insights and Arguments - **Shift in Policy Focus**: The main goal remains unchanged, but constraints have adjusted. Technology will be the core focus for the coming years, with a gradual reduction in direct subsidies and a shift towards building an innovative ecosystem to avoid destructive competition [3][8][12]. - **Gradual Rebalancing**: The policy framework will continue but with nuanced adjustments. The emphasis will be on achieving a balance between multiple objectives, including geopolitical risks and trade friction [3][10][12]. - **AI and Innovation**: AI is expected to enhance productivity through large-scale real-world applications, with a flexible GDP growth target set around 4.5% for the next five years [8][11]. - **Decline of Subsidy-Driven Profits**: Industries that have relied on subsidies will see diminishing returns, shifting the competitive focus to research intensity and execution capabilities of enterprises [8][15]. - **Economic Rebalancing**: The government aims to shift economic growth from supply-driven to demand-driven, with social security reforms expected to stimulate consumption and reduce high savings rates [13][30]. Important but Overlooked Content - **Local Incentive Mechanisms**: The existing local government incentive structures are criticized for promoting quantity over quality, necessitating a reform to encourage consumption rather than production [14][27]. - **Challenges in Total Factor Productivity (TFP)**: TFP growth has significantly slowed, indicating a need for structural reforms to enhance efficiency and resource allocation [17][18]. - **Emerging Industries**: China is rapidly advancing in strategic emerging industries such as AI, robotics, and biotechnology, with expectations to become a leader in these sectors by 2050 [42][43]. - **Supply Chain Vulnerabilities**: Despite advancements, China still faces challenges in high-end semiconductor production and relies on foreign technology for critical components, which poses geopolitical risks [43][44]. Conclusion - The conference call highlights a pivotal moment in China's industrial policy, emphasizing a transition towards innovation and quality, while addressing the need for structural reforms to enhance productivity and consumption. The focus on AI and emerging industries indicates a strategic shift that could redefine China's economic landscape in the coming years [1][3][8][12][42].

Economic Outlook - The 20th Central Committee's Fourth Plenary Session emphasizes technology innovation and expanding domestic demand as key components of the 14th Five-Year Plan[1] - The projected real GDP growth target for 2026-2030 is estimated to be in the range of 4.5%-5.0%, with a target of around 5% for next year[1] - The actual GDP growth rate for Q3 was slightly above expectations at 4.8%, while nominal GDP growth fell to 3.7%[3] Trade Relations - The US-China trade conflict escalated in October but quickly reached a consensus following the fifth round of trade talks from October 24-27[2] - China's exports to the US saw a year-on-year decline of 27% in September, although the rate of decline narrowed by 6.1 percentage points[10] - Despite the recent easing of tensions, the potential for renewed trade conflicts remains, particularly in light of the focus on short-term issues in negotiations[9] Domestic Demand and Investment - Domestic demand indicators, particularly retail sales, have weakened, with September retail sales growth dropping to 3.0% from an average of 5.4% in Q2[21] - Fixed asset investment turned negative in September, with a year-on-year decline of 0.5%[22] - Infrastructure investment is expected to be a key support for overall fixed asset investment recovery, aided by new policy measures totaling 500 billion yuan[46] Inflation and Monetary Policy - The GDP deflator index for Q3 was approximately -1%, indicating persistent deflationary pressures[30] - CPI showed slight improvement in September, but core CPI has been rising for five consecutive months, driven by specific sectors like gold and durable goods[36] - Monetary policy is expected to remain cautious, with potential for further rate cuts if economic conditions do not improve[3]

Core Viewpoint - Foreign institutions express confidence in China's economic and social development during the "15th Five-Year Plan" period, as highlighted by the recent Fourth Plenary Session of the 20th Central Committee [2][10]. Group 1: Focus on Technology and Innovation - The session emphasizes accelerating high-level technological self-reliance and strengthening the modern industrial system, indicating a shift towards an ecosystem-driven strategy and increased support for industries to enhance productivity rather than just scale [4]. - Key macro themes include building a modern industrial system, accelerating technological innovation, and developing a strong domestic market, with a focus on intelligent, green, and integrated development [4][6]. - Research and development spending is projected to grow at a compound annual growth rate of over 7%, aiming for over 3.2% of GDP by 2030, translating to approximately 5.5 trillion to 6.0 trillion yuan [4]. Group 2: Expanding Domestic Demand and High-Level Opening Up - The session indicates a shift towards prioritizing policies that address structural challenges and enhance domestic demand, with a focus on improving social welfare and consumption [8][9]. - The strategy includes a commitment to expanding domestic demand while promoting new supply and creating new demand, linking consumption policies closely with social safety nets and public service access [8][9]. - The plan also aims to expand high-level opening up, maintaining a multilateral trade system and enhancing international cooperation, which is crucial given the ongoing trade tensions [9]. Group 3: Economic Growth Projections - By 2035, the goal is for significant improvements in economic, technological, and defense capabilities, with per capita GDP expected to reach between 25,000 to 30,000 USD [11][12]. - The projected annual GDP growth rate for the "15th Five-Year Plan" period is estimated to be between 4.5% and 5.0%, with a focus on synchronizing per capita income growth with GDP growth [12].

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the economic outlook under the changing dynamics between China and the United States, particularly in the context of the Asia Pacific region [2][3]. Core Economic Insights - The actual GDP growth rate for the year is expected to reach 4.8%, with a decline in growth anticipated in the second half of the year [7][8]. - The persistent issue of deflation remains a significant challenge, with nominal GDP weakening affecting wage growth [17][18]. - The fiscal impulse has weakened since August, leading to a rapid decline in infrastructure investment [11][12]. Investment and Consumption Trends - Infrastructure investment growth rates have shown a downward trend across various sectors, including utilities and transportation [13]. - Consumer sentiment has deteriorated, with a notable increase in youth unemployment rates [22][24]. - Retail sales, excluding old-for-new products, have shown a significant decline, particularly in housing-related consumption and automobiles [19]. Export Performance - China's export performance has exceeded expectations, benefiting from supply chain advantages, despite a noticeable decline in exports to the U.S. [26][27]. - Exports to non-U.S. regions have remained strong, indicating resilience in the face of trade tensions [26]. U.S.-China Trade Relations - Recent developments include China's expansion of rare earth controls and the U.S. threatening to impose 100% tariffs [30][31]. - Ongoing bilateral consultations are noted, with both sides expressing the need to avoid new restrictive measures [31][32]. - The potential scenarios for U.S.-China relations range from tactical escalations to long-term economic decoupling [34][36]. Rare Earth and Technology Controls - The tightening of rare earth controls by China may accelerate the global shift away from reliance on Chinese supplies [41]. - The U.S. has intensified technology controls, particularly in the semiconductor sector, where China's self-sufficiency remains low [46]. Structural Economic Challenges - The high savings rate in China reflects deep-seated structural imbalances in the economy, with a significant portion of savings concentrated in bank deposits [83][85]. - The report emphasizes the need for consumption to rebalance the economy, with social security reforms being crucial for increasing consumption's share in GDP [66][63]. Policy Recommendations - A comprehensive fiscal stimulus plan of approximately 10 trillion RMB is proposed to boost consumption and support economic recovery [51]. - Structural reforms are necessary to address the systemic tendencies of overcapacity and improve resource allocation efficiency [108]. Real Estate Market Insights - The real estate sector is still in a phase of adjustment, with new construction activity having largely completed its quantitative adjustments, while price adjustments remain uncertain [78]. - The report suggests that real estate inventory reduction will serve social welfare rather than solely support real estate companies [80]. Conclusion - The overall economic outlook remains cautious, with significant challenges posed by deflation, structural imbalances, and geopolitical tensions. The emphasis on reforms and fiscal measures is critical for stabilizing and stimulating the economy moving forward [7][66][51].

Group 1: Policy Outlook - The Fourth Plenary Session will release two important documents regarding the 15th Five-Year Plan, with the first public announcement on October 23 and a more detailed proposal on October 27[3] - The public announcement is expected to outline key tasks for the 15th Five-Year Plan (2026-2030), focusing on economic growth, structural reforms, social governance, ecological protection, and improving people's livelihoods[3] - The policy tone is anticipated to be balanced, with a low likelihood of significant surprises for the market[8] Group 2: Economic Projections - The Central Economic Work Conference in mid-December will set the growth target for 2026, likely maintaining a target around 5% to balance short-term employment stability and long-term GDP growth goals[13] - The 15th Five-Year Plan will include specific quantitative targets for GDP growth, R&D intensity, urbanization rate, carbon emissions, and social welfare, to be announced in March 2026[11] - The overall economic strategy will continue to emphasize supply-side reforms while gradually improving the social security system[8] Group 3: Consumer Behavior - During the "Golden Week" holiday, daily travel and total spending increased by 1.6% and 1% year-on-year, respectively, indicating a 13% decline in per capita daily spending[12] - Retail sales for key retail and catering enterprises grew by 2.7% year-on-year, lower than the 3.4% growth rate in August[14]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The stabilization and recovery of fixed - asset investment growth require the central government to increase fiscal leverage, as real - estate storage and infrastructure funds face challenges [2][8]. - China is undergoing an economic re - balance from investment to consumption. The government's assessment method may shift from GDP to increasing the proportion of consumption in GDP. Future policies may reform the social security system to release consumption potential [2][25]. - A moderate recovery of inflation is a prerequisite for releasing consumption potential. Inflation recovery will drive corporate profit improvement, increase residents' income, and then achieve consumption recovery. Future inflation is expected to stabilize and rebound [2][52]. 3. Summary According to the Table of Contents 3.1 Investment: Central Fiscal Leverage Expected to Increase - **Real - estate**: The downward inertia is large, policy support is gradually increasing, but demand - side stimulus policies have under - performed expectations. The progress of real - estate storage is accelerating, and central fiscal funds are crucial for breaking the "impossible triangle" among storage parties, sellers, and commercial banks [9][10][11]. - **Infrastructure**: The growth rate of infrastructure investment is declining. As of September 14, the proportion of new special bonds invested in land reserves is 14.3%. If the scale of land - reserve special bonds continues to increase this year, the funds for traditional infrastructure may be less than in 2024. The infrastructure investment structure will continue to be divided, with central - government - led projects stronger and local - government - led projects weaker. The estimated overall infrastructure growth rate in 2025 is about 2.6% [14][18][20]. - **Manufacturing**: "Anti - involution" in emerging industries mainly restricts capital expenditure and capacity expansion, leading to a slowdown in manufacturing investment growth [22]. 3.2 Consumption: Structural Reform of Economic Re - balance - **Policy Support**: A series of consumption - related policies have been introduced, including measures to expand service consumption, financial support for consumption, and special action plans to boost consumption. These policies address both the supply and demand sides of consumption [25]. - **Problems in Consumption**: China's consumption rate is relatively low, mainly due to low household consumption rates. Factors include income polarization, large urban - rural income gaps, an imperfect social security system, and a low proportion of service consumption [28][33][37]. - **Solutions**: The "Boosting Consumption Special Action" addresses key consumption issues from multiple aspects such as income increase, consumption capacity support, service supply improvement, and policy support. Future consumption policies may focus more on service consumption [41][42][50]. 3.3 Inflation: An Important Tool to Stabilize Expectations and Promote Consumption - **Relationship with Consumption**: A moderate recovery of inflation is necessary for releasing consumption potential. Inflation recovery drives corporate profit improvement, increases residents' income, and promotes consumption recovery [52]. - **CPI Differentiation**: There are two significant differentiations in CPI. The core CPI and CPI are diverging, and service consumption and commodity consumption within the core CPI are also diverging. Future consumption policies may shift towards service consumption [55]. - **Inflation Outlook**: Considering the central bank's stance and the expected increase in "anti - involution" policies, future inflation will stabilize and rebound. Although inflation is in a state of "weak reality and strong expectation" in the second half of the year, the data recovery may occur in the first half of next year [58].

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the Chinese economy, particularly the high household savings rate and low consumption levels, which are indicative of economic imbalance [1][8][30]. Core Insights and Arguments 1. **High Household Savings Rate**: China's household savings rate stands at 35%, significantly higher than other major economies, reflecting structural issues in social security and economic uncertainties since 2018 [2][30]. 2. **Excess Savings Accumulation**: Over the past seven years, households have accumulated approximately 30 trillion RMB in excess savings, with 6-7 trillion RMB allocated to fixed deposits [2][12][37]. 3. **Need for Social Security Reform**: The report emphasizes that social security reform is crucial for releasing excess savings and achieving economic rebalancing, which is necessary to address the challenges of debt and deflation [8][21][30]. 4. **Three-Step Approach to Release Excess Savings**: - **Step 1**: Restore consumer confidence and risk appetite, particularly among high-income groups, to facilitate the transition of excess fixed deposits into equity markets [20][24]. - **Step 2**: Stabilize inflation expectations over the next 6-8 years to convert excess savings into consumption, which will further stimulate economic growth [20][26]. - **Step 3**: Implement comprehensive social security reforms to systematically lower the household savings rate [21][25]. 5. **Projected Economic Impact**: If reforms are effectively implemented, it is estimated that the release of excess savings could increase annual consumption growth by 1-1.4 percentage points over the next five years, potentially raising the consumption-to-GDP ratio by 1.3-1.6 percentage points by 2030 [3][26]. Additional Important Insights 1. **Structural Issues in Social Security**: The current social security system is fragmented and inadequate, leading to increased precautionary savings among households [9][30]. 2. **Impact of Economic Shocks**: Economic shocks since 2018, including trade tensions and the COVID-19 pandemic, have heightened the need for precautionary savings, further entrenching the high savings rate [10][35]. 3. **Potential for Consumption Growth**: Despite the high savings rate, there is significant potential for consumption growth if excess savings can be effectively mobilized [8][30]. 4. **International Comparisons**: The report draws parallels with Japan and the U.S. regarding how to manage excess savings and restore consumer confidence, highlighting the importance of timely policy responses [19][51]. Conclusion - The report outlines a comprehensive strategy for addressing the high savings rate in China through social security reform and economic policy adjustments, emphasizing the potential for increased consumption and economic rebalancing if these measures are successfully implemented [26][30].

Core Insights - The China-Europe Railway Express is facing unprecedented challenges due to the escalation of the Russia-Ukraine conflict, leading to a significant decrease in operation frequency and rising logistics costs [1][2][3] - European countries are exhibiting a calm response, driven by the need for economic structural adjustment and complex international strategic dynamics [1][2] Economic Rebalancing - The long-standing trade deficit between China and the EU has prompted calls for a structural resolution, with the China-Europe Railway Express being a critical hub for Chinese goods in Europe [2] - The EU is actively seeking to adjust its trade strategy with China to achieve a more balanced economic interaction, reducing reliance on specific Chinese imports while enhancing local export capabilities [2] Geopolitical Dynamics - The U.S. plays a significant role in the geopolitical landscape, urging Europe to reduce trade routes through Russia to limit its economic space [3] - This geopolitical maneuvering indirectly influences European trade and transportation decisions, showcasing U.S. commitment to its long-term strategy [3] Poland's Strategic Role - Poland serves as a crucial gateway for the China-Europe Railway Express into the EU, with recent border closures reflecting its strategic considerations and the EU's evolving policy towards China [6] - The internal EU debate on China policy is intensifying, with a growing faction advocating for a tougher stance [6] Risk Restructuring - The operational challenges of the China-Europe Railway Express have highlighted issues related to insurance and security, with increased rates placing a financial burden on logistics companies [7][16] - The uncertainty caused by the conflict has led to a shift in trade flows towards more expensive and time-consuming maritime and air transport options [9] Corporate Adaptation - European companies are adjusting their supply chain strategies to enhance resilience, with some relocating manufacturing closer to the European market [10] - This transformation is gradual but is already evident across various industries [10] Russia's Position and Communication Efforts - Russia, as a key transit country, is focusing more on bilateral trade with China while being cautious about transit operations due to Western sanctions [11] - China is actively communicating with countries along the route to address logistical challenges, although geopolitical complexities complicate negotiations [11] Market Dynamics and Strategic Balancing - Changes in consumer trends, environmental regulations, and manufacturing layouts are reshaping the trade landscape between China and Europe [13] - European decision-makers are striving to balance short-term economic interests with long-term strategic goals, navigating the complexities of international relations [13] Insurance Industry Trends - The insurance sector's risk assessment is shaping the operational outlook for the China-Europe Railway Express, with high premiums continuing to restrict its viability [16] EU's Strategic Reevaluation - The EU is systematically reassessing the strategic significance of various international transport routes, considering factors like supply chain resilience and geopolitical uncertainties [17] - Technical challenges, such as differences in rail gauge and customs cooperation, require ongoing multilateral efforts to resolve [17] Political Dynamics and Coordination - Political voices within the European Parliament are advocating for a tougher stance on China, influencing the overall decision-making environment [18] - Coordination among EU member states remains a challenge, with differing views on China policy among major countries [18] Data-Driven Insights - Data from frontline operations, such as freight volume and transportation costs, are crucial for policy formulation, while broader macroeconomic challenges dilute focus on the railway issues [19] Future Outlook - Despite some operational routes still functioning, overall capacity has significantly contracted, with companies seeking to maintain services through adjustments [20] - The future trajectory of the China-Europe Railway Express will be influenced by geopolitical developments, changes in international trade structures, and the resolution of technical issues [20]