Investment Rating - The report indicates a cautious outlook for the Chinese economy, suggesting a potential demand cliff in H2 2025, leading to a GDP growth forecast drop to 4.0% year-on-year from approximately 5.1% in H1 2025 [3][4]. Core Insights - The report highlights a recurring pattern in China's economic performance, where optimism in the first half of the year is often followed by disappointing outcomes in the second half, particularly in 2023 and 2024 [2]. - Austerity measures initiated in mid-May are expected to significantly impact consumption, particularly in the services sector, leading to a notable slowdown in retail sales growth to 3.1% year-on-year in H2 from an expected 5.1% in H1 [8][11]. - The property market continues to face severe challenges, with new home sales volume and value declining significantly, indicating a prolonged correction phase [32][35]. Summary by Sections Economic Outlook - The report anticipates a demand cliff in H2 2025 due to multiple factors, including austerity measures, a payback effect from durable goods sales, and ongoing issues in the property sector [3][4]. - GDP growth is projected to decrease to 4.0% year-on-year in H2 from around 5.1% in H1 2025 [3]. Austerity Measures - The new anti-extravagance campaign has led to a significant drop in demand for services, particularly in the catering and alcohol sectors, with retail sales growth expected to slow to 3.1% year-on-year in H2 [6][11]. - The average funding for the consumer trade-in program is projected to decrease, further impacting retail sales growth [7][13]. Property Market - The property market is entering its fifth year of correction, with new home sales and prices continuing to decline, particularly in large cities [32][33]. - Existing home prices in tier-1 cities fell by 0.9% in April-May 2025, indicating ongoing weakness in the housing market [34]. Export Sector - China's export growth is expected to slow sharply in H2 2025 due to payback effects from front-loading and high tariffs, with a full-year export growth forecast of 0.0% [44][45]. - High-frequency data indicates strong headwinds for exports, with manufacturing sector PMIs reflecting contraction [45][46]. Investment Trends - Investment growth in key sectors has decelerated, with significant declines noted in the solar and lithium-ion battery sectors, highlighting the need for regulatory intervention [26][27]. - The report emphasizes that the ongoing issues of overinvestment and capacity underutilization are likely to create short-term economic headwinds [24][25].

A gauge of Chinese property shares posted its biggest gain in nearly nine months, fueled by speculation a high-level meeting will be held next week to help revive the struggling sector https://t.co/FsCpxwqxEO ...

New World completed a complex refinancing with bank lenders but elsewhere in Hong Kong distress lingers with property prices near a nine-year low. Read it here in The Brink. https://t.co/Ua11s6gMZd ...

Local police in China have found a perverse way to raise money after the country’s property crash https://t.co/yDx9JepZMR ...

Investment Rating - The report does not explicitly state an investment rating for the China property sector, but it indicates a continued pessimistic outlook for housing prices and suggests the need for government intervention to stimulate the market [4]. Core Insights - The latest China Housing survey shows a subdued intention to buy property, with 48% of respondents indicating no intention to purchase, up from 36% in September 2024 [7]. - There is a divergence in sentiment among cities, with stable purchase intentions in tier 1 cities (32% intention to buy) compared to declines in tier 2 (20%) and tier 3 cities (19%) [16]. - The survey indicates that 42% of respondents expect further declines in housing prices over the next 12 months, with 47% of homeowners reporting paper losses, particularly in tier 2 and 3 cities [4][9]. Summary by Sections Housing Market Sentiment - The intention to buy property has decreased, with a notable increase in respondents who do not plan to purchase [7]. - In tier 1 cities, purchase intentions have increased slightly, while tier 2 and 3 cities have seen declines [16]. Factors Influencing Purchase Confidence - The top three factors boosting household confidence to buy properties are job promotions/salary increments, lower mortgage rates, and lower down-payment requirements [3][23]. - The report suggests that interest rate cuts may be the most effective measure to improve confidence, with expectations of a 20-30 basis point cut for the remainder of 2025 [3]. Price Expectations and Market Dynamics - The survey indicates a continued pessimistic outlook for housing prices, with 42% of respondents anticipating further declines [4]. - Secondary listings across 50 cities have increased by 7.1% year-over-year, indicating a potential downward trend in property prices [29]. Government Intervention - The report highlights the need for government intervention through pro-growth policies, mortgage rate cuts, and financing support to stimulate the market [4]. - Project completion is identified as a critical priority for the government to restore confidence in new home sales [3].

Investment Rating - The report does not explicitly provide an investment rating for the industry or specific companies. Core Insights - A-share investor sentiment remains flat amid lukewarm macro conditions and geopolitical instability, with the weighted MSASI at 66% and simple MSASI at 53% as of June 18, 2025 [2][7] - The PBOC announced measures to open up China's financial markets, including a digital RMB international operating center and pilot programs for offshore trade, which may benefit financial companies [5] - Real GDP is tracking at 4.8% YoY, with expectations of deceleration to below 4.5% in the second half of the year due to weak domestic demand and the payback of export front-loading [4] Summary by Sections A-Share Market Sentiment - A-share investor sentiment indicators remained flat, with average daily turnover for ChiNext, Equity Futures, and Northbound rising by 3%, 13%, and 9% respectively, while A-shares saw a 1% decline [2] - Southbound net inflows reached US$2.4 billion from June 12-18, with year-to-date inflows at US$88.5 billion [3] Economic Outlook - The report anticipates a deceleration in real GDP growth to below 4.5% in the second half of 2025, influenced by weak domestic demand and the expiration of a tariff truce [4] - Retail sales showed improvement due to trade-in subsidies, but overall consumer goods sales remain subdued [4] Financial Market Developments - The PBOC's measures aim to enhance overseas development and open up financial markets, indicating a shift in focus from risk control to development [5] - The report highlights potential volatility in the market, particularly for high beta stocks, as geopolitical uncertainties persist [15]

Investment Rating - The report indicates a mixed investment outlook for the industry, with industrial production rated at 0, fixed asset investment at -1, and retail sales at +2 [2]. Core Insights - The report highlights that China's industrial production and fixed asset investment missed market expectations, while retail sales showed significant growth, indicating a divergence in economic performance across sectors [1][17]. - The report emphasizes the importance of government policy in stimulating domestic demand, particularly through consumer goods trade-in programs, amidst ongoing deflationary pressures and a prolonged downturn in the property market [1][17]. Summary by Sections Industrial Production - Industrial production (IP) growth moderated to 5.8% year-on-year in May from 6.1% in April, primarily due to slowing export growth linked to increased US tariffs [8][11]. - Sequentially, IP is estimated to have contracted by 0.1% month-on-month non-annualized in May [8]. - Key sectors such as electrical machinery and chemical manufacturing experienced slower output growth, overshadowing gains in automobile production [8][11]. Fixed Asset Investment - Fixed asset investment (FAI) growth slowed to 2.9% year-on-year in May from 3.6% in April, driven mainly by declines in infrastructure and property investments [10][11]. - Manufacturing investment growth remained robust at 7.8% year-on-year in May, contrasting with the overall slowdown in FAI [10]. Retail Sales - Retail sales growth surged to 6.4% year-on-year in May, significantly above market consensus, driven by strong sales in home appliances and communication equipment [11][12]. - The growth in online and offline goods sales improved, with notable increases in restaurant sales revenue as well [11]. - The report cautions that the recent retail sales improvement may not be sustainable due to potential payback effects and funding shortages in consumer goods trade-in programs [1][11]. Property Market - Property-related activity remained weak, with property sales declining by 3.3% year-on-year in volume and 5.9% in value terms in May [13]. - New home starts and completions also showed significant year-on-year declines, indicating ongoing challenges in the real estate sector [13]. Labor Market - The nationwide unemployment rate edged down to 5.0% in May from 5.1% in April, reflecting seasonal patterns, while the unemployment rate for migrant workers increased slightly [14][17]. - Youth unemployment rates showed some moderation but are expected to rise amid the upcoming college graduation season [14][17].

Summary of Key Points from the Conference Call Industry Overview - **Industry**: Chinese Economy - **Date**: March 21, 2025 - **Source**: Citi Research Core Insights 1. **Manufacturing PMI Forecast**: The Manufacturing PMI is expected to be around 51 for March, indicating a post-reopening high, reflecting a positive economic trajectory [1][5][11] 2. **EPMI Surge**: The Emerging Sectors PMI (EPMI) rose sharply from 49.0 in February to 59.6 in March, marking the second highest reading for March since 2019, suggesting strong momentum in the new economy [2][3] 3. **Old Economy Stability**: The old economy is showing resilience with home sales in top-30 cities increasing by 9.7% year-over-year in the first 20 days of March, cargo throughput at ports rising by 1.2% year-over-year, and stable retail auto sales with double-digit increases in sales volume [3][12][13] 4. **Policy Outlook**: Policymakers are likely in a wait-and-see mode, with expectations of a 50 basis points RRR cut in Q2 2025 and a 20 basis points rate cut in Q3 2025, as external economic pressures mount [1][3] Additional Important Details 1. **Sector Performance**: Improvement was noted across various segments including production, new orders, employment, and prices, indicating that emerging sectors are providing substantial support to the economy amid the "AI+" race [2] 2. **Cargo Throughput**: The impact of US tariffs has not yet been reflected in the data, with cargo throughput at ports showing steady growth [3][8] 3. **Retail Auto Sales**: The trade-in scheme continues to support auto sales, contributing to the stability observed in March [3][13] This summary encapsulates the key points discussed in the conference call regarding the current state and outlook of the Chinese economy, highlighting both the strengths in emerging sectors and the stability of traditional sectors.