20 Oct 2025 03:05:17 ET │ 13 pages China Economics Vi e w p o i n t | Eyes on Fiscal Implementation with Growth On Track To Target CITI'S TAKE GDP growth slowed to 4.8%YoY in 25Q3 in China as expected, amid the slowdown during summer. The "around 5%" growth target could still be within reach, with 5.2%YoY achieved in 25Q1-3. Long-standing concerns remain, with negative GDP deflator for the 10th consecutive quarter and supply-demand imbalance persisting. The monthly data for September still featured a beat i ...

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **China Economics** sector, particularly analyzing inflation trends and upstream prices influenced by anti-involution efforts [1][4][6]. Core Insights and Arguments - **Inflation Trends**: - Headline CPI remained soft at -0.3% YoY, while core inflation rose to 1.0% YoY for the first time in 19 months, indicating a gradual recovery in core goods inflation, particularly in gold jewelry and durable goods [1][4][6]. - Core goods inflation is estimated at 1.5% YoY, the highest since January 2020, driven by significant increases in gold jewelry prices (6.5% MoM and 42.1% YoY) [4][6][9]. - **PPI Dynamics**: - PPI deflation narrowed to -2.3% YoY, with a sequential change of 0.0% MoM, suggesting some stabilization in upstream prices due to anti-involution initiatives [4][6][16]. - The contraction in ferrous metal smelting narrowed significantly to -0.6% YoY from -10.0% YoY two months prior, indicating a recovery in this sector [4][6][16]. - **Sector Performance**: - Downstream sectors showed limited improvement, with PPI for autos contracting by -3.0% YoY and electronics prices declining by -2.5% YoY, highlighting ongoing demand challenges [4][6][16]. - Energy prices negatively impacted headline CPI, with transportation fuel prices dropping -1.7% MoM [4][6]. - **Future Outlook**: - The GDP deflator is expected to find a bottom in Q3 2025, supported by base effects and anti-involution initiatives, but the medium-term reflation outlook remains uncertain and heavily reliant on demand-side factors [6][7]. - Policymakers are expected to focus on supply and demand rebalancing in the upcoming 15th Five-Year Plan, with potential regulatory actions in the solar sector [6][7]. Additional Important Insights - **Consumer Behavior**: - The report notes that one-off factors, such as gold prices and trade-in subsidies, may not provide sustainable inflationary impulses going forward, emphasizing the need for a more balanced demand-supply dynamic [7][16]. - **Sector-Specific Developments**: - The report highlights price increases in solar energy and a narrowing contraction in lithium battery prices, indicating potential growth areas within the energy sector [4][6][16]. - **Policy Implications**: - The anti-involution initiative is seen as a critical factor in stabilizing prices, with explicit announcements from the National Development and Reform Commission (NDRC) expected to support this effort [6][7]. This summary encapsulates the key points from the conference call, providing a comprehensive overview of the current economic landscape in China, particularly regarding inflation and sector performance.

Economic Growth - The economy is reportedly growing at nearly 4%, contrasting with the Federal Reserve and Congressional Budget Office's estimates of 1.5% to 1.6% [1][2] - The Atlanta Fed has projected a growth rate of 3.9% for the quarter ending in September [2] Tax and Regulatory Policies - The discussion emphasizes the effectiveness of lower tax rates, particularly on investors, in driving economic growth [3][4] - The implementation of the 2017 tax cuts is highlighted as a significant factor in the current economic performance [8] Business Investment - Business investment is growing faster than consumption, indicating a positive trend in production and supply-side policies [6][14] - The GDP report shows that the information technology and intellectual property sectors are growing at 15% annually [19] Inflation and Price Trends - The GDP deflator was reported at 2.1%, aligning with the Federal Reserve's target rate, suggesting manageable inflation levels [12][13] - The PCE deflator was reported to be under 3%, indicating no significant inflation concerns [11] International Competitiveness - The importance of avoiding double taxation on American companies is stressed, as it could hinder growth and competitiveness [17] - The administration's stance against imposing a global minimum tax is seen as crucial for maintaining a favorable tax environment for U.S. businesses [16]

When politicians talk about the economy, they rarely stick to the fine print. A recent segment from economist and TV host Larry Kudlow praised what he called "The Trump Effect", a mix of tax cuts, market optimism and a blue-collar boom. It sounds exciting but Kudlow has also previously been singled out by decision scientists as a "consistently wrong" pundit[1], so what's the truth? Must Read What Kudlow argued Kudlow’s look at revised government data that showed U.S. GDP growing at 3.8% during the se ...