Summary of the Fifteenth Five-Year Plan (15th FYP) Conference Call Industry Overview - The conference call discusses the **Fifteenth Five-Year Plan (15th FYP)** of China, focusing on economic rebalancing and technological self-reliance as key priorities. Key Points and Arguments 1. Economic Rebalancing - The **CPC's Suggestion** for the 15th FYP emphasizes a clearer intention for economic rebalancing, aiming to increase the consumption share in GDP [1][4][5] - The philosophy of consumption policy has shifted from a supply-centric approach to a more balanced supply-and-demand perspective [5][15] 2. Consumption Policy - The Suggestion explicitly targets a **significant increase in household consumption share** and aims to strengthen domestic demand as a leading driver of economic growth [8][18] - The plan includes discussions on welfare, social security, and common prosperity, addressing weak links in the current system [5][18] 3. Layered Industrial and Innovation Policies - The policy focus for traditional sectors will be on quality improvement, while emerging sectors like **new energy** will see efforts to strengthen and scale development [11][12] - The plan includes unconventional measures for key sectors and basic research, such as higher R&D expense deduction ratios and government procurement of innovative products [12][11] 4. Supply-and-Demand Balance in Consumption - The new consumption policy emphasizes both demand-side factors (employment, income, expectations) and supply-side support (expanding high-quality goods and services) [15][16] - Restrictions on auto and housing consumption are to be cleared to stimulate demand during economic downturns [15][16] 5. Welfare and Common Prosperity - The Suggestion aims to increase the household income share in national income and improve social security systems, including pensions and unemployment insurance [18][19] - Housing supply, particularly affordable housing, is highlighted as a key welfare issue [18][19] 6. Anti-Involution and Fiscal Policies - The term "involution" is addressed, focusing on the need for a **national unified market** and the regulation of local governments to prevent protectionism [21][22] - Fiscal policies will be proactive, with an emphasis on enhancing fiscal sustainability and regulating tax preferential policies [23][24] 7. Opening-Up and RMB Internationalization - The Suggestion reiterates the importance of institutional and services opening-up, with a supportive tone towards foreign direct investment (FDI) [23][24] - The plan aims to establish a **cross-border payment system for RMB**, indicating a more proactive approach to RMB internationalization compared to previous plans [24][23] Other Important Content - The conference call indicates that the full document of the 15th FYP will be approved by the NPC in early March 2026, with ongoing policy communications expected [4][5] - The market focus is anticipated to shift towards actual policy measures and their magnitudes in the coming weeks and months [4][5] This summary encapsulates the critical insights and strategic directions outlined in the conference call regarding China's 15th Five-Year Plan, highlighting the emphasis on economic rebalancing, consumption, innovation, and welfare improvements.

Summary of Key Points from the Conference Call Industry Overview - **Industry**: China Economics - **Focus**: Economic policies and outlook in China, particularly regarding stimulus measures and the upcoming Five-Year Plan Core Insights and Arguments 1. **No Near-term Stimulus**: The Politburo meeting decided to maintain cyclical policy continuity and will hold the 4th Plenary Session in October to discuss the 15th Five-Year Plan [8] 2. **Policy Prioritization**: The focus is on targeted social welfare and urban upgrades rather than broad stimulus measures. Supply-side reforms may be adjusted but not aggressively pursued [2][3] 3. **Economic Performance**: The Politburo noted robust economic performance in the first half of the year despite ongoing challenges, advocating for "more optimized implementation" of fiscal and monetary policies [3] 4. **Gradual Anti-involution Implementation**: The tone of the meeting was measured, indicating a gradual approach to the anti-involution initiative rather than a drastic shift [4][8] 5. **Support for Consumption**: New policies aim to support consumption through improved social welfare provisions, although fiscal support for service consumption remains limited [5][8] 6. **Urban Renewal Initiatives**: Urban renewal is highlighted as a policy lever to mitigate housing market downturns and bolster infrastructure investment demand [8] Additional Important Content 1. **Future Clarity on Policies**: More clarity on proactive rebalancing and stimulus signals is expected in the fall, particularly as growth may slow in the coming months [2][3] 2. **Supportive Capital Market Tone**: The Politburo maintained a supportive stance towards the capital market, aiming to consolidate the ongoing recovery [8] 3. **Focus on Social Welfare**: The emphasis on social welfare aligns with broader initiatives such as fertility subsidies and free preschool education, indicating a shift towards long-term structural support [8]

Report Industry Investment Rating - Not provided in the given content Core Viewpoints - LGFVs continued to consolidate, and investors turned to USD issues for higher absolute yields as lower-yielding CNH issues lacked catalysts to tighten further [2] - China's PMI indicates waning economic momentum, and the policy easing window may not open until Q4 2025. China may have stronger motivation to advance economic rebalancing after a potential trade deal with the US [3][11] - Moody's changed the rating outlook of SK Hynix to positive from stable and affirmed its Baa2 rating, and SK Hynix is favored for its strong global market position and solid operating cash flow [7][9] Summary by Relevant Catalogs Trading Desk Comments - VNKRLE obtained up to RMB869mn loans from SZ Metro, and YLLGSP further bought back YLLGSP 5 1/8 05/20/26. VNKRLE 27 - 29 were 0.4 - 0.5pts lower, and YLLGSP 26 was 0.1pt higher [1] - In China IG, MEITUA/WB/XIAOMI 30s ended with 1 bp tighter to 1bp wider. New CB 3 - tranche CNH issues dropped 0.2 - 0.375pts from RO, and there was better buying on the 30yr papers [1] - In HK, HYSAN/NANFUN were unchanged to 0.5pt higher, whilst MTRC perps remained unchanged [1] - For TW lifers, CATLIF 34/39 were 1bp tighter to 2bps wider amid PB selling, NSINTW was unchanged, and SHIKON widened 1bp amid two - way flows [1] - For Thailand banks, BBLTB sub curve tightened 2 - 4bps and KBANK tightened 2bps [1] - In KR, DAESEC 26/29 widened 1bp and NHSECS 28 - 30 was 2bps tighter to 1bp wider. LGENSO curve retraced 2 - 4bps while HYNMTR/HYUELE tightened 1 - 4bps amid PB/AM buying [1] - FRN space is in good demand across Asia and EU bank papers. Investors in the region remained better buyers of Japanese and Yankee AT1s while there were selling flows from London [1] Morning Market Update - The new UBS 6.6 Perp was unchanged from RO at par, the new UBS 7 Perp was 0.1pt higher from RO at par. HAOHUA widened 1 - 2bps. DAESEC tightened 1 - 2bps. STANLN/MIZUHO/SUMIBK FRNs tightened 1 - 2bps. ANZ/CBAAU T2 widened 1 - 2bps [3] Macro News Recap - S&P (-0.37%), Dow (-0.74%) and Nasdaq (-0.03%) were lower on Thursday. US latest initial jobless claims was +218k, lower than the market expectation of +222k. US Jun'25 Core PCE price index was +2.8% yoy, higher than the market expectation of +2.7%. UST yield was largely unchanged on Thursday, 2/5/10/30 yield at 3.94%/3.96%/4.37%/4.89% [6] Desk Analyst Comments - Moody's changed the rating outlook of SK Hynix to positive from stable and affirmed its Baa2 rating, expecting its adjusted EBITDA to increase and adjusted debt/EBITDA to improve in FY25 - 26 [7] - SK Hynix overtook Samsung to become the world's leading memory chipmaker by revenue in Q2 2025, driven by higher demand for AI chips [8] China Economy Analysis - Manufacturing PMI further contracted with fading export front - loading. New order and export order indexes dropped, production moderated, and deflation pressure eased [11][12] - Non - manufacturing PMI softened as both service and construction activities moderated. Service PMI edged down, and construction PMI dipped [11][13] Offshore Asia New Issues - Offshore Asia New Issues (Priced): Chengdu & Europe Industrial Zone issued 156 USD mn in 3 - year bonds with a 6.95% coupon and unrated [17] - Offshore Asia New Issues (Pipeline): No new issues pipeline today [18] News and Market Color - There were 66 credit bonds issued onshore yesterday with an amount of RMB35bn. Month - to - date, 2,097 credit bonds were issued with a total amount of RMB2,143bn raised, representing a 12.7% yoy increase [19] - China new home sales fell 24% yoy in Jul'25 as stimulus impact faded [19] - Various company financial results and events were reported, such as Adani Enterprises' 1QFY26 EBITDA fall, MGM China's 2Q25 net revenue rise, etc. [19]