October 9, 2025 01:45 PM GMT China Musings | Asia Pacific 4th Plenum and Beyond: What to Expect The Fourth Plenum will release two documents on the Five-Year Plan: China will hold the 4th Plenum on October 20-23. On October 23, a high-level Communiqué (5,000 to 6,000 Chinese characters) will be released, outlining the overarching priorities for the next five years. On October 26-27, a more detailed "Central Government Suggestions for Drafting the FYP" (~20,000 characters) will likely follow, providing more ...

4 October 2025 | 2:28AM HKT Portfolio Strategy Research CHINA WEEKLY KICKSTART Markets gained 2-4% in a shortened trading week; 4th Plenum to be held Oct 20-23; Industrial profits surged in August; Mixed PMIs in September MXCN rallied 4.0% this week, led by Retailing/Materials (+8.9%/+8.1%). CSI300 gained 2.0% in a shortened trading week heading into the National Day Holiday. The nationwide railway carried over 23mn passengers on Oct 1, a record-high in terms of daily volume. The CPCCC 4th Plenum will be he ...

V i e w p o i n t | 25 Sep 2025 20:21:14 ET │ 9 pages China Economics China Export Tracker (21): A New Trade Strategy? CITI'S TAKE We update our high-frequency trackers of China's exports up to September 24th. Most indicators we track improved in the past week. We expect China's exports to expand ~10.0%YoY in September. With the exports resilience we highlighted in our Outlook 25H2 playing out, we reiterate our full-year GDP forecast at 5%. Meanwhile, a new strategy for managing China's trade relationships ...

Summary of Key Points from the Conference Call Industry and Company Overview - The conference call discusses the implications of China's 15th Five-Year Plan (FYP) for the economy, markets, and sectors, focusing on rebalancing strategies and their impact on various industries. Core Insights and Arguments 1. **Rebalancing Theme**: The 15th FYP will emphasize rebalancing as an imperative theme, shifting from a supply-centric to a supply-demand balanced policy mode [1][2][9] 2. **Economic Growth Targets**: The new FYP aims for GDP growth in the range of 4.5-5.0%, with a realistic target of approximately 4.7% [2][12] 3. **AI Capital Expenditure**: An estimated >RMB3.3 trillion in AI capital expenditure is projected for 2025-2030, highlighting the importance of "new productive forces" [1][12][65] 4. **Consumption Rebalancing**: Genuine consumption rebalancing requires an additional ~RMB20 trillion, with a proposed realistic package of ~RMB16 trillion focused on structural cash handouts and social security enhancements [2][12][86] 5. **Sector Upgrades and Downgrades**: Healthcare and Insurance sectors have been upgraded to Overweight, while Telecoms and Oil & Gas sectors have been downgraded to Underweight in anticipation of the 15th FYP [1][4] Commodities Insights 1. **Energy Sector Changes**: A shift towards electrification and self-sufficiency is expected to reduce oil demand while increasing demand for power and renewables [3] 2. **Metals Demand**: The transition of capital from property to "new productive forces" is expected to benefit copper and aluminum, while iron ore and steel may face bearish trends [3] Additional Important Content 1. **Policy Focus**: The 15th FYP will likely prioritize economic development, tech and innovation, social welfare, green development, and reform [4][11] 2. **Debt Management**: Local government debt growth has slowed to a record low of 3.2% YoY in 2024, with an estimated LGFV debt stock at RMB55.3 trillion or 41.0% of GDP [36][38] 3. **Environmental Goals**: China is on track to meet its 2030 carbon peak goal, with energy consumption per unit of GDP declining by -11.6% from 2021-2024 [42][45] 4. **Service Sector Support**: The 15th FYP will likely prioritize service sectors, with financial and fiscal support aimed at accommodation, catering, and elderly care [79][81] This summary encapsulates the key points discussed in the conference call, providing insights into the strategic direction of China's economic policies and their implications for various sectors.

Summary of Key Points from the Conference Call Industry Overview - The report discusses the performance of the Chinese equity market, specifically the MXCN and CSI300 indices, which experienced a decline of 3.4% and 1.8% respectively after reaching four-year and year-to-date highs the previous week [1] - The Politburo meeting on July 30 indicated a reduced urgency for stimulus measures in the near term, reflecting a cautious approach to economic management [1] - The report highlights the ongoing trade discussions between US and Chinese officials, with an agreement to seek an extension of the 90-day tariff truce [1] Market Performance and Projections - The 12-month targets for MXCN and CSI300 have been raised to 90 and 4,500 from previous targets of 85 and 4,400, indicating a positive outlook despite recent corrections [1][29] - Southbound inflows reached US$7.6 billion this week, with a revised estimate for 2025 inflows increased to US$160 billion from US$110 billion [1][24] - The report notes that the People's Bank of China (PBOC) Q2 surveys indicated lower loan demand, and both official manufacturing and non-manufacturing PMIs fell in July [1] Sector Performance - Health Care and Growth sectors led the performance with increases of 5.7% and 2.9%, while Property and Value sectors lagged with declines of 2.3% and 3.6% respectively [2] - The report indicates that the Health Care sector has shown significant earnings growth, with a notable 95% increase in 1H25 earnings [32] Earnings and Valuations - The consensus estimates for EPS growth in 2025/26 are projected at 5%/13% for MXCN and 15%/12% for CSI300, suggesting a positive earnings outlook [10] - The report highlights that 5% of all China-listed companies have reported earnings so far, with 1H/2Q25 earnings rising 19%/23% year-over-year [32] Policy and Regulatory Environment - The National Development and Reform Commission (NDRC) released new draft guidelines aimed at tightening oversight of government-backed investment funds, emphasizing a stronger focus on strategic industries [1] - The report mentions that the China Securities Regulatory Commission (CSRC) summoned Nvidia over security risks associated with H20 chips, indicating increased scrutiny in the tech sector [6] Additional Insights - The report notes that government actions have been taken in sectors where "involution" risks are high, suggesting a proactive regulatory stance [16] - The MSCI China index has rallied 25% year-to-date, marking the second-best first seven-month returns since 2010, reflecting strong market momentum despite recent corrections [12] This summary encapsulates the key points from the conference call, providing insights into the current state of the Chinese equity market, sector performance, earnings outlook, and regulatory environment.

Investment Rating - The report maintains a low expectation for cyclical policy changes in the upcoming mid-year Politburo meeting, indicating a cautious investment outlook for the industry [3][4][5]. Core Insights - Policymakers are likely to adopt a wait-and-see approach while leaving room for small-scale support measures, particularly a potential quasi-fiscal stimulus of approximately RMB500 billion [3][6][8]. - The focus on anti-involution initiatives suggests a shift towards Supply Side Reform 2.0, with expected actions to cut low-efficient capacity and enhance supply for higher-end products [4][5]. - The upcoming Fourth Plenary Session of the 20th Party Congress may provide high-level guidance on the 15th Five-Year Plan, emphasizing strategic planning over numeric targets [5][6]. Summary by Sections Policy Tools - Monetary policy is expected to include a 10 basis points cut in the policy rate and a 50 basis points reduction in the reserve requirement ratio (RRR) [6][7]. - Structural policy tools will likely be reactivated, with a focus on a size of approximately RMB500 billion for policy-finance instruments [6][7]. - Fiscal policies will not see an interim budget revision or an increase in government bond quotas, but will include continued trade-in policies, childcare subsidies, and further property support [6][7]. Supply Side Reform - The report anticipates various actions across sectors, including capacity cuts, regulation tightening, and fine-tuning of industrial policies [4][7]. - The emphasis on medium-term structural issues will likely include discussions on economic rebalancing, particularly in consumption and industrial policies [5][6].

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - China requires not just new stimulus but a new growth algorithm, with a focus on structural rebalancing of its growth model [2][4] - The upcoming 15th Five-Year Plan (2026–2030) will be a critical test for the implementation of proposed reforms [13] Summary by Sections Fiscal System Reform - The current tax regime heavily relies on indirect taxes like VAT, which incentivizes overproduction and overcapacity [5] - Rebalancing fiscal transfers and reducing project-based subsidies are essential to support public goods and household income [6] Realigning Macro Targets - China's macroeconomic targets have historically focused on production, emphasizing GDP growth and industrial output while neglecting household consumption and social welfare [9] - A shift from a supply-centric approach to a demand-focused policy is necessary for economic rebalancing [9] Improving Statistics Mechanism and Revamping Official Performance Evaluations - The National Bureau of Statistics (NBS) primarily uses a production approach for GDP accounting, which complicates the alignment of local officials' behavior with consumption metrics [10][11] - Redefining performance evaluations to prioritize household consumption and environmental quality is crucial for meaningful change [11] Institutional Challenges - Despite encouraging reform signals, there is significant institutional inertia that may hinder the implementation of new policies [12] - The 15th Five-Year Plan could institutionalize structural reforms, but it requires political will and bureaucratic alignment to succeed [13][14]