Economic Growth Outlook - After the reduction of tariffs between China and the US in May, there was a brief uptick in economic activity, but concerns remain about potential changes in growth momentum in the second half of the year[2] - Leading indicators suggest that both domestic and external demand will show resilience until the end of Q3, with year-on-year growth rates expected to gradually strengthen[2] - However, both domestic and external demand may peak and decline towards the end of Q3, leading to a notable growth "cliff" effect[2] Economic Indicators - The PMI for May improved to 49.5%, indicating a slowdown in contraction, but still below the expansion threshold, primarily due to weak demand[16] - High-frequency data shows that production in May was weaker than in April, while demand showed some improvement, particularly in infrastructure and consumer sectors[18] - Following the tariff adjustments, export production saw a significant year-on-year improvement, but signs of weakening emerged by the end of May[26] Investment Trends - Manufacturing investment is expected to fluctuate in line with export trends, while infrastructure investment is projected to peak in August, and the decline in real estate investment is anticipated to narrow gradually in the second half of the year[8] - The nominal growth perspective indicates that the DVI index, which leads the GDP deflator, has remained flat without significant signs of recovery, suggesting potential downward pressure on actual GDP growth in Q3[8] Policy Response - The anticipated growth cliff may exceed market expectations, posing challenges for "responsive" policy measures, which typically require time to take effect[9] - There are three scenarios where policy measures could mitigate the growth cliff: weaker-than-expected export pulses, significant pressure on price indices, and changes in external trade policy environments[9] Risks - Uncertainties surrounding tariff policies remain a significant risk factor[10] - New growth drivers may smooth out economic fluctuations, but there is a possibility of missing key leading indicators in decision-making[10]