Core Viewpoint - China's GDP grew by 5.3% year-on-year in the first half of the year, with strong performance in consumption, exports, and industrial production, leading several international investment banks to raise their economic growth forecasts for China in 2025 [1] Group 1: Economic Growth and Forecasts - UBS raised its 2025 GDP growth forecast for China from 4% to 4.7%, citing a robust second-quarter GDP growth of 5.2% supported by "trade-in" subsidies and stable export growth [1] - Morgan Stanley increased its 2025 GDP growth forecast from 4.5% to 4.8%, highlighting export resilience and proactive fiscal measures as key growth drivers [1] - Nomura maintained its GDP growth predictions for the second half of this year and 2026 but slightly adjusted its 2025 forecast upward due to better-than-expected second-quarter GDP growth [4] Group 2: Export Performance and Policy Support - The report indicated that exports outperformed expectations due to factors like "export grabbing" towards the U.S., ASEAN transshipment, and the depreciation of the yuan against non-dollar currencies [2] - Barclays Bank anticipates increased government efforts to boost consumption in the second half, including expanding the "trade-in" policy to more categories and potentially extending subsidies to additional service sectors [4] - UBS expects additional stimulus measures to be introduced by the government in late Q3 or Q4, including an increase in the fiscal deficit ratio by over 0.5 percentage points and interest rate cuts of 20-30 basis points [4] Group 3: Economic Challenges Ahead - Morgan Stanley noted that economic growth is expected to slow further in the second half, with weakening exports becoming a major drag on growth due to the fading "export grabbing" effect and renewed U.S. tariff policies [5] - The marginal effectiveness of fiscal stimulus is expected to diminish, and the impact of the "trade-in" policy on consumption will gradually decline [5] - A stimulus package of approximately 0.5 to 1 trillion yuan may be introduced, with timing potentially in September or October, allowing policymakers to assess economic trends more accurately [5]

Group 1 - The fiscal policy plays a crucial role in stabilizing growth amid increasing external uncertainties [1] - In the first half of this year, the issuance of new special bonds reached approximately 2.1607 trillion yuan, a growth of about 44.7% compared to 1.4935 trillion yuan in the same period of 2024 [2] - The government plans to arrange 4.4 trillion yuan in local government special bonds, an increase of 500 billion yuan from the previous year, focusing on investment construction, land acquisition, and settling local government debts [2] Group 2 - The National Development and Reform Commission emphasizes the need to effectively utilize various government investment tools and optimize the direction of central budget investments [4] - Infrastructure investment grew by 5.6% year-on-year from January to May, indicating a strong performance [4] - Analysts expect a further acceleration in the issuance of special bonds in the third quarter, which will serve as a significant support for stabilizing growth [4]

Revenue Insights - In the first four months of 2025, the national general public budget revenue was 80,616 billion yuan, a year-on-year decrease of 0.4%, with the decline narrowing by 0.7 percentage points compared to the first quarter[1] - April marked the first positive growth in tax revenue for 2025, with a year-on-year increase of 1.9%[1] - Local government land transfer revenue also turned positive in April, increasing by 4.3% year-on-year, recovering from a decline of 16.5% in March[1] Expenditure Trends - General public fiscal expenditure in the first four months has reached 31.5% of the annual budget, the fastest pace since 2020[1] - In April, public fiscal expenditure grew by 5.8% year-on-year, with significant increases in social security and employment (9.6%), health (10.2%), and education (6.0%) expenditures[2] - Infrastructure-related expenditure in April showed a modest growth of 1.8%, significantly lower than the growth in social welfare spending[2] Government Fund Dynamics - Government fund income saw a year-on-year increase of 8.1% in April, recovering from a decline of 11.7% in March, driven by improved land transfer revenue[3] - Government fund expenditure surged by 44.7% year-on-year in April, largely supported by accelerated issuance of special bonds[3] Risk Considerations - Potential risks include incomplete statistical information, policy outcomes falling short of expectations, unexpected changes in domestic economic conditions, and fluctuations in exports[3]