Investment Rating - The report upgrades the 2025 full-year GDP growth forecast to 4.7% from 4% previously projected [5][54]. Core Insights - Robust Q2 GDP growth of 5.2% YoY was supported by better retail sales and solid exports, despite ongoing property downturn and decelerating fixed asset investment (FAI) growth [2][9]. - The property downturn is expected to continue in H2 2025, impacting construction activities and consumer confidence [3][34]. - Additional policy stimulus is anticipated to be modest and data-dependent, with expectations of a fiscal stimulus of >0.5% of GDP in H2 [4][42]. Summary by Sections Economic Growth - Q2 GDP growth was 5.2% YoY, slightly lower than Q1's 5.4% [7][9]. - Industrial production growth edged down to 6.2% YoY in Q2 from 6.5% in Q1, while service value-added growth improved [9][15]. - The report anticipates a deceleration in economic growth in H2, particularly in Q4, with expected GDP growth of 4.7% YoY in Q3 and below 4% YoY in Q4 [5][54]. Exports and Trade - China's exports grew by 6.2% YoY in Q2, with a revised full-year export growth forecast of 1% for 2025 [3][29]. - Exports to the US are expected to decline deeper in H2 due to tariff shocks and front-loading effects [3][29]. - The report notes that global demand for Chinese goods outside the US appears better than expected, with strong growth in exports to ASEAN and EU [26][29]. Fixed Asset Investment - FAI growth decelerated to 2.1% YoY in Q2 from 4.2% in Q1, with property investment contracting by -12.1% [13][54]. - Equipment purchases remained strong, contributing positively to overall FAI growth [13][19]. Consumption - Retail sales growth moderated to 4.8% YoY in June from 6.4% in May, with expectations of decelerating consumption growth in H2 due to high base effects from trade-in subsidies [11][35]. - The report highlights that household disposable income growth may slow, impacting consumption without fiscal subsidies [35][54]. Policy Stimulus - The government is expected to deliver additional fiscal stimulus in H2, but the scale is likely to be modest at >0.5% of GDP [4][42]. - The People's Bank of China (PBC) is anticipated to cut policy rates by another 20-30 basis points in H2 [4][42]. Currency Outlook - The report suggests that the Chinese Yuan (CNY) may strengthen in the near term but could weaken towards the end of 2025, with expectations of a range of 7.0-7.3 against the US dollar in H2 [56][54].