Core Viewpoint - The macro leverage ratio in China has reached 302.4% in Q4 2025, driven by a passive increase due to declining nominal GDP growth, with household and corporate debt growth remaining low [3][4][11]. Economic Overview - The macro leverage ratio increased by 0.1 percentage points in Q4 2025, marking a total annual rise of 11.8 percentage points, with nominal GDP growth slowing to 4.0%, the lowest since the reform and opening up period [4][11]. - The actual GDP growth for 2025 was 5.0%, indicating that the increase in leverage was primarily due to the decline in nominal GDP rather than rapid credit expansion [4][11]. Sector Analysis - Household leverage decreased by 2.0 percentage points, while non-financial corporate leverage rose by 6.2 percentage points, and government leverage increased by 7.6 percentage points [5][10]. - The household debt growth rate was only 0.5%, the lowest on record, with mortgage growth at -1.5%, continuing a trend of negative growth for 11 consecutive quarters [7][9]. Consumer Behavior - High real mortgage rates have led to increased early repayments, contributing to a reduction in mortgage balances [8][9]. - Consumer loan growth dropped to 0.2%, the lowest ever, due to stagnant income growth, with median disposable income growth at 4.5%, also a historical low [9][12]. Government Policy Recommendations - The report suggests accelerating income growth plans for urban and rural residents and stabilizing state-owned enterprise leverage while supporting private enterprises to increase leverage [12][13]. - It emphasizes the need for government investment in human capital and social welfare sectors to stimulate consumption and improve the macro leverage ratio [12][13].