Summary of Key Points from the Conference Call Industry Overview - **Industry**: China Economics and Market Dynamics - **Company**: Morgan Stanley Asia Limited Core Insights and Arguments 1. **Economic Growth Projections**: Real GDP growth is expected to reach 4.8% in 2025, with a slowdown anticipated in the second half of the year, alongside persistent deflation trends [2][10][15] 2. **Export Weakness**: Exports are projected to weaken in the second half of 2025 due to payback from front-loading and weaker global trade, exacerbated by higher US tariffs on global trade partners [6][8] 3. **Fiscal Stimulus Decline**: Fiscal stimulus has been front-loaded to the first half of 2025, with a reduced fiscal impulse expected from August onwards [10][11] 4. **Deflation Feedback Loop**: A continued deflation feedback loop is observed, with weaker nominal GDP negatively impacting wage growth [15][16] 5. **Housing Market Concerns**: Housing investment has largely completed its adjustment, but the outlook for housing prices remains uncertain, indicating potential risks in the real estate sector [20][22] 6. **Market Sentiment Factors**: Market sentiment is supported by liquidity, with significant inflows from major institutions and retail investors into the A-share market in the first half of 2025, estimated at approximately RMB 1.5-1.7 trillion [25][27] 7. **Narrative Shift**: A more constructive narrative is forming around China’s economic policies, with a pivot towards addressing social dynamics and anti-involution measures [37][39] 8. **Household Savings Reallocation**: There is potential for RMB 6-7 trillion in household savings to be reallocated towards riskier investments, contingent on improved risk appetite and macroeconomic fundamentals [42][46] 9. **AI and Tech Sector Growth**: The tech sector, particularly AI, is expected to see significant growth, with policy support and increased capital expenditure in emerging sectors [62][64][72] 10. **Reflation Strategy**: A "5R" reflation strategy is being implemented, focusing on rebalancing the economy through fiscal measures, social welfare reforms, and structural adjustments [135][136] Additional Important Insights - **Inflation and Price Dynamics**: The potential for deflation to persist into 2026 is highlighted, with various scenarios outlined from worst-case to ideal outcomes [104][105] - **Sector-Specific Implications**: Different sectors are experiencing varying levels of urgency and potential for anti-involution measures, with specific action plans and challenges identified for sectors like EV batteries, cement, and airlines [131][134] - **Social Welfare Reforms**: Emphasis on social welfare reforms as a key component for economic rebalancing, including subsidies for families and education [143][140] This summary encapsulates the critical insights and projections discussed during the conference call, providing a comprehensive overview of the current economic landscape and future expectations for China.

Key Takeaways from July PMI Conference Call Industry Overview - The conference call focuses on the **China Economics** sector, specifically analyzing the **July PMI (Purchasing Managers' Index)** data which indicates a softening growth trend in the manufacturing and non-manufacturing sectors [1][2]. Core Insights and Arguments 1. **Manufacturing PMI Decline**: The July manufacturing PMI registered at **49.3**, below expectations (Consensus: **49.7**; June: **49.7**), indicating broad-based weakness primarily due to weaker demand and modest production cuts linked to anti-involution measures [5][8]. 2. **New Orders and Export Orders**: New orders decreased by **0.8 percentage points** to **49.4**, while new export orders fell by **0.6 percentage points** to **47.1**, reflecting a decline in demand [2][6]. 3. **Production and Employment**: Production softened to **50.5** (down **0.5 percentage points**), and employment remained weak at **48.0**, indicating challenges in labor demand [2][6]. 4. **Non-Manufacturing PMI**: The non-manufacturing PMI also declined to **50.1**, with construction activities particularly affected, dropping **2.2 percentage points** due to adverse weather conditions [2][8]. 5. **Price Indices**: The Producer Price Index (PPI) is expected to improve slightly to **-0.2%** month-on-month in July (from **-0.4%** in June), with a year-on-year change edging up to **-3.5%** [3][8]. 6. **GDP Growth Outlook**: Real GDP growth is projected to slip to **4.5%** in Q3 (compared to **5.2%** in Q2), influenced by factors such as export front-loading and limited new stimulus measures [4][8]. Additional Important Points - **Consumer Sentiment**: The service PMI remained subdued at **50**, reflecting sluggish consumer sentiment, which may impact future demand [2][8]. - **Upstream Pricing**: There is a modest sequential rise in input prices (up **3.1 percentage points** to **51.5**), but output prices showed a milder contraction (up **2.1 percentage points** to **48.3**), indicating limited passthrough amid soft final demand [3][8]. - **Weather Impact**: Adverse weather conditions have notably affected construction activities, contributing to the decline in non-manufacturing PMI [2][8]. This summary encapsulates the critical insights from the July PMI conference call, highlighting the challenges faced by the manufacturing and non-manufacturing sectors in China, along with the implications for economic growth and consumer sentiment.

V i e w p o i n t | 02 Jul 2025 06:16:49 ET │ 9 pages China Economics Steady Growth into the Summer – June/Q2 Data Preview CITI'S TAKE We maintain our growth forecast at a steady 5.2%YoY for 25Q2E, though June's monthly indicators could be more mixed. Given the strong outturn in 25H1, we see firm policy determination to meet the GDP target this year despite little urgency to strike the policy put soon. Our policy expectations on the upcoming Politburo meeting are thus realistically muted (see: 25H2 Outlook: ...

China Weekly: May Mixed Growth, Softer Fiscal Condition; June Weaker Home Sales High frequency: weaker home sales in June, softer port activities 30-city property sales declined further to -9% YoY in the first 21 days of June from - 3% YoY in May. That in tier 1 cities slid to -4% YoY, tier 2 cities narrowed decline to - 12% YoY and tier 3 cities declined by -6% YoY. Port cargo throughput and container throughput growth both softened to -1% YoY and 2% YoY in the first 15 days (vs 4% YoY and 7% YoY in May). ...