Summary of Key Points from the Conference Call Industry Overview - The focus is on the **Chinese economy** and its projected performance in **2026**. Core Economic Forecasts - **GDP Growth**: Expected to slow to **4.5%** in 2026 from around **5%** in 2025, primarily due to a reduced contribution from net exports [2][6][25]. - **Exports**: Anticipated to decelerate, with a forecasted growth of **2.5-3%** in 2026, influenced by global demand slowdown and US tariff impacts [6][7][40]. - **CPI Inflation**: Expected to rise to **0.4%** in 2026, while PPI is projected to narrow its decline [2][16][21]. - **RMB Exchange Rate**: Anticipated to appreciate against its currency basket but stabilize against the USD, with a forecast of **7.0/6.9** for USDCNY by end-2026/2027 [20][23]. Key Themes and Policy Support - **Policy Tone**: A modestly supportive and balanced policy stance is expected, with a stable budget deficit at **4%** and fiscal expansion of **0.5-1%** of GDP [3][25]. - **Interest Rates**: A **20bps** cut in policy rates is anticipated by the end of 2026, along with a **25-50bps** reduction in RRR [3][25]. - **Innovation Focus**: The government aims to boost innovation, with R&D spending expected to rise from **2.7%** of GDP in 2024 to over **3.2%** by 2030 [26][27]. Sector-Specific Insights - **Property Market**: The downturn is expected to continue, with property sales and investment projected to decline by **5-10%** in 2026 [8][39]. - **Consumption**: Growth is expected to remain modest but softer, influenced by reduced trade-in subsidies and a normalization of auto purchase taxes [14][39]. - **Fixed Asset Investment (FAI)**: A modest recovery is anticipated in 2026, particularly in infrastructure, supported by delayed project kick-offs and special financing tools [15][39]. Risks and Uncertainties - **US-China Relations**: Ongoing trade tensions could pose risks, with potential for new disputes despite a current truce [41][42]. - **AI Development**: The trajectory of AI investment and its impact on productivity remains uncertain, with potential upside or downside risks depending on market conditions [42][39]. Additional Considerations - **Structural Changes**: The government is focusing on anti-involution measures and market opening, aiming to enhance property rights and streamline market access [28][39]. - **Fiscal Measures**: The new Five-Year Plan will emphasize household consumption and social safety net improvements, indicating a shift in consumption policy [14][25][39]. This summary encapsulates the key points discussed in the conference call regarding the Chinese economy and its outlook for 2026, highlighting both opportunities and risks.