Summary of Key Points from the Conference Call Industry Overview - The discussion centers around the **Chinese economy** and its **2-speed growth model**, highlighting the divergence between strong sectors (exports/manufacturing) and weak sectors (consumption/property) [3][5]. Core Insights and Arguments - The narrative regarding China's economic performance has shifted from a simplistic view of "China in recession" to a more nuanced perspective that acknowledges both strengths and weaknesses [3][10]. - The **strong track** of the economy, particularly in technology sectors such as AI and robotics, has gained more attention, while the **weak track** remains subdued [5][9]. - Key factors contributing to the narrative shift include: - **Re-evaluation of Chinese tech**: Increased appreciation for China's capabilities in innovative sectors [9]. - **Trade resilience**: Despite a 20% decline in exports to the US, overall exports remained stable in 2025 [9]. - **Easing of "Japanification" fears**: Concerns about prolonged deflation have lessened, leading to rising bond yields since early 2025 [9]. - **Weak US dollar**: The dollar index fell by 9% in 2025, allowing MSCI China to outperform the S&P 500 for the first time since 2020 [9]. - **US policies**: Current US trade and geopolitical policies have indirectly benefited China [9]. Additional Important Insights - The market's improved performance may attract more foreign investors, leading to a better understanding of China's economic landscape [11]. - A balanced perspective is essential; while the narrative of "China is winning" is gaining traction, it does not negate the ongoing challenges, particularly in domestic demand and deflation [12][14]. - The **CNY (Chinese Yuan)** is expected to remain passive, tied to the US dollar, until a significant domestic economic recovery occurs [23]. - The **2025 market rally** was primarily driven by multiple re-ratings rather than earnings growth, which remains muted due to the deflationary environment [12][15]. Future Considerations - The potential for a **fundamental recovery** in the Chinese economy is contingent upon significant demand-side stimulus [22]. - The narrative shift from "un-investable" to "partly investable" in the Chinese market, particularly in tech and export sectors, indicates a cautious optimism among investors [21]. - The weak track of the economy is likely to persist as long as the strong track remains robust, suggesting a prolonged period of 2-speed growth [14].