1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The stabilization and recovery of fixed - asset investment growth require the central government to increase fiscal leverage, as real - estate storage and infrastructure funds face challenges [2][8]. - China is undergoing an economic re - balance from investment to consumption. The government's assessment method may shift from GDP to increasing the proportion of consumption in GDP. Future policies may reform the social security system to release consumption potential [2][25]. - A moderate recovery of inflation is a prerequisite for releasing consumption potential. Inflation recovery will drive corporate profit improvement, increase residents' income, and then achieve consumption recovery. Future inflation is expected to stabilize and rebound [2][52]. 3. Summary According to the Table of Contents 3.1 Investment: Central Fiscal Leverage Expected to Increase - **Real - estate**: The downward inertia is large, policy support is gradually increasing, but demand - side stimulus policies have under - performed expectations. The progress of real - estate storage is accelerating, and central fiscal funds are crucial for breaking the "impossible triangle" among storage parties, sellers, and commercial banks [9][10][11]. - **Infrastructure**: The growth rate of infrastructure investment is declining. As of September 14, the proportion of new special bonds invested in land reserves is 14.3%. If the scale of land - reserve special bonds continues to increase this year, the funds for traditional infrastructure may be less than in 2024. The infrastructure investment structure will continue to be divided, with central - government - led projects stronger and local - government - led projects weaker. The estimated overall infrastructure growth rate in 2025 is about 2.6% [14][18][20]. - **Manufacturing**: "Anti - involution" in emerging industries mainly restricts capital expenditure and capacity expansion, leading to a slowdown in manufacturing investment growth [22]. 3.2 Consumption: Structural Reform of Economic Re - balance - **Policy Support**: A series of consumption - related policies have been introduced, including measures to expand service consumption, financial support for consumption, and special action plans to boost consumption. These policies address both the supply and demand sides of consumption [25]. - **Problems in Consumption**: China's consumption rate is relatively low, mainly due to low household consumption rates. Factors include income polarization, large urban - rural income gaps, an imperfect social security system, and a low proportion of service consumption [28][33][37]. - **Solutions**: The "Boosting Consumption Special Action" addresses key consumption issues from multiple aspects such as income increase, consumption capacity support, service supply improvement, and policy support. Future consumption policies may focus more on service consumption [41][42][50]. 3.3 Inflation: An Important Tool to Stabilize Expectations and Promote Consumption - **Relationship with Consumption**: A moderate recovery of inflation is necessary for releasing consumption potential. Inflation recovery drives corporate profit improvement, increases residents' income, and promotes consumption recovery [52]. - **CPI Differentiation**: There are two significant differentiations in CPI. The core CPI and CPI are diverging, and service consumption and commodity consumption within the core CPI are also diverging. Future consumption policies may shift towards service consumption [55]. - **Inflation Outlook**: Considering the central bank's stance and the expected increase in "anti - involution" policies, future inflation will stabilize and rebound. Although inflation is in a state of "weak reality and strong expectation" in the second half of the year, the data recovery may occur in the first half of next year [58].

Group 1: U.S. Economic Policy - The risk of a U.S. government shutdown is increasing, with Trump canceling a meeting with Democratic leaders and the House planning to reconvene only on October 1[1] - The U.S. has confirmed a 15% tariff on EU cars and parts starting August 1, and new tariffs on various imports, including 50% on kitchen cabinets and 100% on patented drugs, effective October 1[1] - The U.S. second-quarter GDP growth was revised up to an annualized rate of 3.8%, significantly higher than the previous estimate of 3.3%[1] - Initial jobless claims fell by 14,000 to 218,000, the lowest level since mid-July, and well below the market expectation of 235,000[1] Group 2: Global Economic Indicators - Eurozone's September manufacturing PMI fell to 49.5, below the neutral mark, while services PMI rose to 51.4, exceeding expectations[1] - Japan's Tokyo core CPI rose by 2.5% year-on-year in September, indicating stable inflation pressure[5] - The CME FedWatch data shows an 87.7% probability of a 25 basis point rate cut in October, with an average expected policy rate of 3.59% by the end of 2025[1] Group 3: Market Reactions - Global stock market optimism has decreased, with precious metal prices rising due to the increased risk of a U.S. government shutdown[10] - The S&P 500 index fell by 0.3%, while the Dow Jones and Nasdaq dropped by 0.1% and 0.7%, respectively[12] - The dollar index rose by 0.55%, closing at 98.19, while major non-U.S. currencies declined against the dollar[19]

Economic Overview - In 2024, Guangdong's GDP reached 14.16 trillion yuan, while Jiangsu's GDP was 13.7 trillion yuan, narrowing the gap to 462.6 billion yuan. Jiangsu's real growth rate of 5.8% significantly outpaced Guangdong's 3.5% [2] - By the first half of 2025, Jiangsu's GDP was 669.68 billion yuan, and Guangdong's was 687.25 billion yuan, further reducing the economic gap to 175.76 billion yuan, the smallest in nearly six years [2] Infrastructure Investment - Since 2019, Jiangsu has shown a clear upward trend in infrastructure investment growth, while Guangdong's investment has been declining. In 2024, Jiangsu's infrastructure investment growth was 13.3%, compared to Guangdong's mere 0.2% [2][3] - Jiangsu's county-level state-owned enterprises (SOEs) have significantly larger financing scales compared to Guangdong, with Jiangsu's county SOEs financing 8.54 trillion yuan through 481 enterprises, while Guangdong's 49 enterprises financed only 1.54 trillion yuan [3] Development Models - Jiangsu's development model is characterized by "government-led, park-driven, and debt-supported," while Guangdong's model emphasizes "market-led, private enterprise-driven, and global layout" [5] - Jiangsu's unique fiscal system allows county-level governments significant financial autonomy, enabling them to mobilize resources effectively, unlike Guangdong, where only a few cities have similar fiscal arrangements [5][8] Financing Mechanisms - Jiangsu has a special financial support mechanism for county-level investment companies, allowing them to obtain funds at costs below 3%, creating a sustainable funding loop for infrastructure projects [6] - In contrast, Guangdong's financing relies heavily on government special bonds, raising concerns about its future economic sustainability [3][6] Cultural and Risk Factors - The cultural differences between Jiangsu and Guangdong affect their economic governance, with Jiangsu's model being more reliant on government intervention, while Guangdong's market-oriented approach fosters greater entrepreneurial spirit [9][10] - Guangdong's historical financial issues have led to a more cautious approach to debt, limiting its ability to replicate Jiangsu's high-leverage investment strategies [10][19] Consumer Market Potential - Guangdong's large domestic market, with a retail sales total of 4.79 trillion yuan in 2024, provides significant opportunities for industrial development, emphasizing the importance of building a consumer market [11][12] - The province's manufacturing sector is diverse, with a complete industrial chain, making it well-positioned to transition from "Made in Guangdong" to "Brand from Guangdong" [11][14] Internationalization and Reform - Guangdong needs to enhance its internationalization efforts, drawing lessons from Japan's overseas investment strategies to support its manufacturing sector [15][17] - The province should explore institutional reforms to enhance its role as a "co-legislator" in national policy-making, particularly in areas like cross-border finance and professional services [18][19]

Core Viewpoint - The newly passed Shanghai Private Economy Promotion Regulation aims to enhance the role of private enterprises in the local economy, emphasizing protection and encouragement for these businesses [1][2]. Group 1: Legislative Framework - The Shanghai Private Economy Promotion Regulation will take effect on October 20, 2023, and is a local legislative refinement based on the national Private Economy Promotion Law [1]. - The regulation consists of 11 chapters, which is two more than the national law, focusing on protecting private enterprises and ensuring fair competition [2]. Group 2: Key Areas of Focus - The regulation addresses six main areas: removing hidden market entry barriers, enhancing policy guidance, solving financing issues, boosting innovation capabilities, optimizing services for enterprises going global, and strengthening rights protection [2][3]. - It emphasizes the implementation of a unified negative list for market entry, ensuring equal treatment of all economic organizations [2]. Group 3: Financing and Global Expansion - The regulation aims to improve credit fairness and establish a government financing guarantee system to support private enterprises [3]. - It includes measures to enhance overseas service systems, facilitate customs processes, and optimize cross-border financial services for private enterprises [3]. Group 4: Economic Performance and Future Plans - In the first half of the year, private enterprises in Shanghai showed positive growth, with industrial output increasing by 8.8% and service sector revenue rising by 9.9% [4]. - The Shanghai Development and Reform Commission plans to implement a "6-in-1" approach to ensure the effective execution of the regulation, focusing on comprehensive policy measures and communication mechanisms [5][6].

Core Insights - The article discusses the importance of industrial structure adjustment in China's 14th and upcoming 15th Five-Year Plans, emphasizing the shift from focusing on the ratio of the three industries to prioritizing technological innovation and R&D investment [3][5][28]. Group 1: Industrial Structure Adjustment in Five-Year Plans - Industrial structure adjustment is a crucial component of China's Five-Year Plans, serving as a key means to achieve core objectives [3][16]. - The focus of industrial structure adjustment has evolved from the ratio of the three industries to a greater emphasis on technological innovation and R&D investment [5][28]. - The 14th Five-Year Plan has introduced specific targets for R&D expenditure and digital economy core industries, reflecting a shift towards more refined and precise planning [5][28]. Group 2: Trends in Industrial Structure Adjustment - The direction of industrial structure adjustment has transitioned from emphasizing the three industries' ratios to focusing on technological innovation [5][28]. - The importance of the service sector has increased, with a notable shift from finance and real estate to information technology and production services [6][47]. - The 15th Five-Year Plan is expected to continue supporting technological innovation and address issues such as supply-demand mismatches and "involution" in the manufacturing sector [7][8][22]. Group 3: Key Areas of Focus in the 15th Five-Year Plan - The 15th Five-Year Plan is likely to prioritize emerging industries such as artificial intelligence, marine economy, and commercial aerospace [7][22]. - There is an anticipated increase in the emphasis on service industry development, particularly in enhancing service consumption and trade [8][26]. - The plan may also focus on improving the quality and efficiency of service industries, aligning with the broader economic development goals [8][49].

Core Viewpoint - The market's focus on "anti-involution" has significantly increased, but there is considerable divergence in understanding "involution"; most viewpoints interpret it through the lens of supply-side reform, which may lead to misunderstandings [1] Misunderstanding of "Involution" and "Anti-Involution" - "Anti-involution" is not equivalent to "anti-surplus"; the causes of demand differ: "surplus" arises from declining demand and passive supply, while "involution" involves proactive supply increases in strong demand areas [2][9] - Price behaviors differ: "surplus" leads to follow-up price reductions due to demand decline, while "involution" results in chaotic price competition despite strong demand [2][9] Supply Issues - Prior to supply-side reform, there was surplus in upstream and state-owned enterprises; the current "anti-involution" is more pronounced in downstream and private enterprises [3][9] - High-energy-consuming industries have completed capacity concentration reforms, and traditional backward capacity is not as significant as before [4][9] Policy Focus - Policies may target industries with excessive supply growth, such as coal and photovoltaic sectors, but the focus is more on downstream adjustments rather than drastic supply reductions [5][9] - Avoiding excessive contraction in upstream supply is crucial to prevent "super-inflation" in prices, which could hinder the effectiveness of "anti-involution" policies [5][9] Policy Mechanisms - "Anti-involution" should not rely solely on self-discipline talks; successful strategies may include encouraging industry mergers, raising industry standards, and matching supportive policies [6][9] - The experience from Japan, the US, and Germany shows that market-driven reforms and non-price competition can effectively address overcapacity issues [7][9] Structural Adjustments - "Anti-involution" requires addressing the structural imbalance in demand rather than stimulating demand in surplus areas; developing service sector demand can help rebalance the economy [7][9] - The service sector has significant potential to absorb manufacturing job losses and alleviate "involution" challenges [7][9] Equipment and Debt Management - Addressing equipment update issues and overdue payments is essential; the current trend shows new equipment purchases without corresponding old equipment retirements, which can exacerbate "involution" [7][9] - The issue of overdue payments is more pronounced now, especially among private enterprises, necessitating stronger governance measures [7][9]

Group 1: Digital Consumption Development - The Ministry of Commerce, along with seven other departments, issued guidelines to promote digital consumption, emphasizing the importance of enhancing both "hard infrastructure" and "soft environment" for digital consumption [4][5] - Digital consumption is projected to reach 23.8 trillion yuan in 2024, accounting for 44.2% of total household consumption [4] - The guidelines encourage the development of digital products, services, and content, aiming to innovate consumption scenarios and stimulate diverse and quality consumption [4][5] Group 2: WTO and Trade Relations - Premier Li Qiang announced that China will not seek new special and differential treatment in WTO negotiations, reflecting China's commitment to a balanced and fair global trade system [6][7] - China submitted a position paper to the WTO, asserting its rights as the largest developing country while emphasizing the need for reform in the organization [7][8] - The announcement aims to strengthen multilateral trade systems and support the global development agenda, aligning with the UN's 2030 Sustainable Development Goals [7][8] Group 3: Free Trade Zone Best Practices - The Ministry of Commerce released the sixth batch of "best practice cases" from free trade zones, totaling 29 cases that focus on trade facilitation, free flow of factors, and high-quality industrial development [9][10] - These cases highlight innovative achievements in areas such as cross-border data flow and customs efficiency, showcasing the unique regional characteristics of different free trade zones [9][10] - The Ministry plans to guide local areas in learning from these best practices to further enhance reform and innovation in free trade zones [11] Group 4: Service Export Policies - The Ministry of Commerce, along with nine other departments, introduced measures to promote service exports, which have grown from $219.1 billion in 2014 to $445.9 billion in 2024, with an average annual growth of 7.3% [12][13] - The new policies include 13 practical measures focusing on financial support, tax incentives, and facilitating international market access for service exports [12][13] - The Ministry aims to enhance the international competitiveness of service export enterprises through these targeted measures [13] Group 5: Sino-US Trade Relations - The Ministry of Commerce emphasized the importance of local-level economic cooperation in Sino-US relations, suggesting that the US should remove unreasonable tariffs to facilitate bilateral trade [14] - The essence of Sino-US economic relations is mutual benefit, with both countries having extensive common interests and cooperation potential [14] - The Ministry expressed hope for a favorable environment for stable and sustainable development of Sino-US trade relations [14]

Core Insights - The economic trend indicator in Sweden rose again in September, indicating a sentiment slightly below normal levels [1] - The consumer confidence index increased for the fifth consecutive month, reflecting improved expectations for personal economic conditions and the overall Swedish economy [1] Group 1: Consumer Confidence - The rise in the consumer confidence index is primarily due to improved expectations regarding personal economic conditions and the outlook for the Swedish economy over the next twelve months [1] - Despite the increase, the consumer confidence index still indicates a level of sentiment that is weak [1] Group 2: Business Sector Confidence - The business sector's expectations for sales prices over the next three months remained stable compared to August and are close to historical averages [1] - The manufacturing confidence index has risen, indicating sentiment at normal levels, although production plans for the next three months are less optimistic than usual [1] - The construction confidence index slightly declined, showing sentiment below normal levels, with over 60% of firms citing insufficient demand as a barrier to growth [1] Group 3: Trade and Services Confidence - The trade confidence index continues to rise, indicating the strongest sentiment in the business sector, although the food retail confidence index has decreased but remains above normal levels [1] - Confidence in automotive trade, wholesale trade, and non-food retail trade is hovering around historical averages [1] - The services confidence index has slightly decreased but still indicates sentiment at normal levels, with ongoing dissatisfaction regarding business volume among firms [1]

Economic Indicators - In September, the US manufacturing PMI fell to 52, while the services PMI dropped to 53.9, indicating a slight slowdown in economic expansion [2] - The composite PMI also decreased to 53.6, marking the lowest level since June 2025, with new orders and employment indices declining [2] - Despite the slowdown, consumer spending remains resilient, and the Federal Reserve's interest rate cuts may help prevent a recession [3] Regulatory Developments - The State Administration for Market Regulation in China has released a draft for public consultation on the basic requirements for food delivery platforms, focusing on service management and fee transparency [4] - The draft aims to regulate platform fees and promotional behaviors to prevent unfair competition and ensure food safety [4][5] Energy Consumption - In August, China's total electricity consumption reached 10,154 billion kWh, a year-on-year increase of 5.0%, with the manufacturing sector showing the highest growth at 5.5% [6] - The electricity demand growth reflects a robust economic recovery, although supply challenges remain due to mismatches in demand and supply timing [7] Computing Industry Initiatives - Hubei Province plans to develop a computing industry cluster, aiming for a total computing power of 25 EFLOPS by 2027, with a focus on integrating computing with optical communication and chip industries [8] - The measures encourage the development of a diverse computing infrastructure and aim to avoid homogeneous competition among cities [9] Labor Market Concerns - A survey indicates that 24% of young employees in the US and Europe are very concerned about potential job loss due to AI, compared to only 10% of older workers [10] - The rise of AI technology presents both challenges and opportunities for young workers, who may leverage AI to enhance their skills and productivity [11] Agricultural Sector Trends - The price of live pigs has dropped significantly, with a 10.4% decrease from early September and a 24.4% decline from the peak in February, reflecting an oversupply in the market [12] - Despite short-term measures to control production, the long-term outlook for the pig farming industry suggests a need for reduced production capacity to balance supply and demand [13] Stock Market Performance - On September 24, the stock market saw a broad increase, with the Shanghai Composite Index rising by 0.83% and the ChiNext Index reaching a three-year high [14] - The semiconductor sector continued to perform strongly, driven by developments in AI and chip demand, while consumer sectors like tourism showed weakness [15]

Core Viewpoint - The article emphasizes the importance of continuous research iteration to approach the truth, highlighting that growth comes from persistent denial and reconstruction [2][26]. Group 1: Research Framework and Goals - The team is undergoing a comprehensive upgrade in 2025, focusing on restructuring the research framework and systematically displaying research outcomes [2]. - The guiding principle is to provide valuable independent research results that are grounded in reality and actionable [2]. Group 2: Economic Insights - The article discusses the shift in the economic "three drivers" from manufacturing to services, indicating that as GDP per capita reaches $10,000 to $30,000 and urbanization hits 70%, service sector demand will accelerate [28]. - It notes that new consumption policies emphasize long-term strategies for domestic demand expansion rather than short-term stimuli, while also providing support for manufacturing to counter tariff impacts [29]. - The concept of "anti-involution" is presented as a new phase of supply-side structural reform, with increased government and industry focus, broader coverage, and stronger coordination among policies and market mechanisms [31]. Group 3: Global Economic Trends - The article highlights that the biggest expectation gap in the global macroeconomic landscape for the first half of 2025 is the disproof of the "American exceptionalism" narrative [21]. - It mentions that the focus of tariffs may shift towards validating economic data, with potential concerns about recession if the U.S. unemployment rate rises to 4.6% [21]. - The impact of geopolitical risks, particularly since the Russia-Ukraine conflict, is noted as a significant factor in global macroeconomic conditions and asset pricing [23].