3 August 2025 | 9:30AM HKT China Weekly Kickstart Markets corrected 2-3% from ytd highs; July Politburo meeting shows less urgency for stimulus; Higher index and Southbound targets MXCN/CSI300 lost 3.4%/1.8% this week after making 4Y and YTD highs last week. Politburo meeting was held on Jul 30 and policymakers showed less urgency for stimulus in the near term. US and Chinese officials agreed to seek an extension of their 90-day tariff truce on Jul 29, following two days of trade talks in Stockholm. Preside ...

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].

July 2, 2025 09:30 AM GMT China Musings | Asia Pacific M Idea The Trio That Could Change Everything — If It's Allowed To China doesn't just need new stimulus, a new growth algorithm is needed too. The "trio" of reforms could eventually form the basis for that. But old habits and incentives die hard. The 15th Five- Year-Plan will be the real litmus test: is Beijing ready to stop rewarding what it wants to reduce? At the Central Commission for Financial and Economic Affairs meeting hosted this Tuesday (July 1 ...