Core Insights - The article highlights a significant disconnect between economic growth and consumer confidence, indicating structural issues in the economy [6][8][24] - It discusses the implications of recent economic data, including GDP growth, employment figures, and asset price movements, suggesting a shift in capital towards tangible assets [10][12][22] Economic Indicators - The GDP growth rate for Q3 remains at 3.9%, but the consumer confidence index has dropped to 53.6, marking a five-month low [6] - The manufacturing PMI fell to 49.1, while the services PMI is at the critical threshold of 50.0 [7] Employment Situation - The unemployment rate is estimated at approximately 4.34%, with ADP data showing a decrease of 32,000 private sector jobs in September [9][14] - Historical patterns indicate that when private employment turns negative while GDP remains positive, at least one economic indicator is misaligned with reality [9] Asset Movements - Gold prices have surpassed $4,003, reflecting a year-to-date increase of about 45%, while the dollar index has decreased by approximately 10% since the beginning of the year [10] - Bitcoin is hovering around $110,000, with a concentration of short positions in the market [11] Market Signals - The article suggests that capital is moving from paper assets to physical safe havens, indicating a shift in investor sentiment [12] - The Federal Reserve's probability of a rate cut in December is estimated at 69.8%, amidst a backdrop of significant economic uncertainty [18] Future Observations - Key upcoming data points include the ISM manufacturing data, ADP employment figures, and services PMI, which will be critical in assessing economic health [22] - If manufacturing PMI remains below 50 and ADP job growth is under 50, the likelihood of a recession could increase significantly [22] Broader Implications - The article notes that past government shutdowns have led to stock market rebounds, but the current debt situation is concerning, with projections of federal debt reaching $38 trillion by 2025 [20] - The impact of artificial intelligence on productivity is noted, but it is suggested that this may be masking underlying weaknesses in the manufacturing sector [21]

Group 1: Macroeconomic Outlook - The report highlights that both the US and China are entering critical years, with global investment driven by three and a half engines: AI investment, defense spending, and industrial restructuring [1][14] - The nominal GDP growth rate is expected to recover, with a focus on domestic demand and technology as key policy areas [1][2] - The transition from old to new economic drivers in China is anticipated to gain momentum, leading to a rebalancing of supply and demand [2][11] Group 2: Policy Environment - The "15th Five-Year Plan" sets a supportive policy tone, with monetary policy expected to remain accommodative, albeit with less room than in the current year [3][15] - Fiscal policy is projected to maintain a certain level of expansion, with total tools estimated at 15.7 trillion yuan, an increase of approximately 1.2 trillion yuan from this year [3][15] - The report emphasizes the importance of structural tools and the coordination between monetary and fiscal policies to support various sectors [3][15] Group 3: Supply and Demand Dynamics - The narrative of "asset scarcity" in the bond market is expected to weaken, with a focus on the verification of corporate profits and capacity utilization [4][18] - The report notes that government bond supply is likely to increase, but market pressure will be manageable due to central bank support [4][18] - Institutional behavior is identified as a major source of market volatility, with a reduction in stable funding leading to increased market fluctuations [4][18] Group 4: Bond Market Strategy - The bond market is expected to maintain a "low interest rate + high volatility" characteristic, with the central rate likely remaining stable or slightly increasing [5][18] - The report suggests a strategy of segment trading, coupon strategies, and equity exposure as priorities over duration adjustment and credit downgrading [5][18] - The ten-year government bond yield is projected to fluctuate between 1.6% and 2.1%, with a widening of term spreads anticipated [5][18]

Report Industry Investment Rating - Not provided in the content Core Views Manufacturing PMI - Supply: Manufacturing production contracted. In October, the production index was 49.7, a change of -2.2 from the previous month. The supplier delivery time index was 50, a change of -0.8 from the previous month [3]. - Demand: Manufacturing demand declined. In October, the new order index was 48.8, a change of -0.9 from the previous month. The new export order index was 45.9, a change of -1.9 from the previous month. The backlog of orders index was 44.5, a change of -0.7 from the previous month [3]. - Supply - demand balance: The supply - demand relationship still needs improvement. In October, the supply - demand index (demand - supply) was -0.9, a change of 1.3 from the previous month, 1.1 from the same period last year, and 0.7 from the average of the past three years [3]. - Price: Manufacturing profitability contracted. In October, the raw material price index was 52.5, a change of -0.7 from the previous month. The ex - factory price index was 47.5, a change of -0.7 from the previous month. The difference between ex - factory price and raw material price was -5.0, a change of 0.0 from the previous month [3]. - Inventory: Pressure eased. In October, the finished goods inventory index was 48.1, a change of -0.1 from the previous month. The raw material inventory index was 47.3, a change of -1.2 from the previous month. The difference between new orders and finished goods inventory was 0.7, a change of -0.8 from the previous month [3]. Non - manufacturing PMI - Supply: Employment improved. In October, the employment index was 45.2, a change of 0.2 from the previous month. Among them, the construction industry was 39.9, a change of 0.2 from the previous month, and the service industry was 46.1, a change of 0.2 from the previous month. The supplier delivery time index was 50.9, a change of -0.2 from the previous month [4]. - Demand: Construction industry demand increased. In October, the new order index was 46, a change of 0.0 from the previous month. Among them, the construction industry was 45.9, a change of 3.7 from the previous month, and the service industry was 46.0, a change of -0.7 from the previous month. The new export order index was 46.2, a change of -3.6 from the previous month. The backlog of orders index was 43.6, a change of -0.8 from the previous month [4]. - Price: Prices rebounded. In October, the input price index was 49.4, a change of 0.4 from the previous month. Among them, the construction industry was 49.6, a change of 2.4 from the previous month, and the service industry was 49.4, a change of 0.1 from the previous month. The sales price index was 47.8, a change of 0.5 from the previous month. Among them, the construction industry was 48.4, a change of 0.3 from the previous month, and the service industry was 47.7, a change of 0.5 from the previous month [4]. - Inventory: Inventory increased. In October, the inventory index was 46, a change of 1.1 from the previous month and 0.3 from the same period last year [5]. Summary by Directory Macro Event - In October, China's manufacturing PMI was 49.0 (-0.8pct MoM); non - manufacturing PMI was 50.1 (+0.1pct MoM) [2] Overview - Affected by holidays, in October, the manufacturing PMI was 49.0, a decline of 0.8 percentage points from the previous month. The non - manufacturing business activity index was 50.1, an increase of 0.1 percentage points from the previous month. The composite PMI output index was 50.0, a decline of 0.6 percentage points from the previous month [9] Demand - Manufacturing: Affected by holidays, in October, the new order index was 48.8, a change of -0.9 from the previous month; the new export order index was 45.9, a change of -1.9 from the previous month; the backlog of orders index was 44.5, a change of -0.7 from the previous month [17] - Non - manufacturing: In October, the new order index was 46, a change of 0.0 from the previous month, indicating that non - manufacturing order demand still needs improvement. Among them, the construction industry was 45.9, a change of 3.7 from the previous month, indicating that the demand in the construction industry began to improve; the service industry was 46.0, a change of -0.7 from the previous month, indicating that the demand in the service industry declined significantly. The new export order index was 46.2, a change of -3.6 from the previous month, indicating a decline in export demand. The backlog of orders index was 43.6, a change of -0.8 from the previous month, indicating that the inventory of existing orders began to be reduced [17] Supply - Manufacturing: In October, the production index was 49.7, a change of -2.2 from the previous month, indicating a decline in manufacturing activities; the production and business activity expectation index was 52.8, a change of -1.3 from the previous month, indicating a decline in expectations; the supplier delivery time index was 50, a change of -0.8 from the previous month, indicating a decline in supply chain response; the employment index was 48.3, a change of -0.2 from the previous month, indicating a contraction in employment [19] - Non - manufacturing: In October, the employment index was 45.2, a change of 0.2 from the previous month, indicating a slight improvement in the employment contraction; among them, the construction industry was 39.9, a change of 0.2 from the previous month, indicating an improvement in employment, and the service industry was 46.1, a change of 0.2 from the previous month, indicating a slight improvement in employment. The supplier delivery time index was 50.9, a change of -0.2 from the previous month, indicating a slight decline in supply chain response. The business activity expectation index was 56.1, a change of 0.4 from the previous month, indicating an improvement in activity sentiment; among them, the construction industry was 56.0, a change of 3.6 from the previous month, indicating an expansion in the construction industry, and the service industry was 56.1, a change of -0.2 from the previous month, indicating a contraction in the service industry [19] Price - Manufacturing: In October, the raw material price index was 52.5, a change of -0.7 from the previous month, indicating a decline in manufacturing upstream costs; the ex - factory price index was 47.5, a change of -0.7 from the previous month, indicating continued price cuts for sales at the consumer end; the difference between ex - factory price and raw material price was -5.0, a change of 0.0 from the previous month, indicating that the contraction of corporate profit expectations still needs improvement [26] - Non - manufacturing: In October, the input price index was 49.4, a change of 0.4 from the previous month, indicating an increase in non - manufacturing costs. Among them, the construction industry was 49.6, a change of 2.4 from the previous month, indicating a rebound in construction industry costs; the service industry was 49.4, a change of 0.1 from the previous month, indicating a slight rebound in service industry costs. The sales price index was 47.8, a change of 0.5 from the previous month, indicating a price increase at the non - manufacturing consumer end. Among them, the construction industry was 48.4, a change of 0.3 from the previous month, indicating a price increase at the construction industry consumer end; the service industry was 47.7, a change of 0.5 from the previous month, indicating a price increase at the service industry consumer end [26] Inventory - Manufacturing: In October, the finished goods inventory index was 48.1, a change of -0.1 from the previous month, indicating a reduction in manufacturing de - stocking pressure; the raw material inventory index was 47.3, a change of -1.2 from the previous month, indicating de - stocking in the manufacturing upstream; the difference between new orders and finished goods inventory was 0.7, a change of -0.8 from the previous month, indicating a suspension of the improvement in manufacturing momentum during the de - stocking process [35] - Non - manufacturing: In October, the inventory index was 46, a change of 1.1 from the previous month and 0.3 from the same period last year, indicating an increase in non - manufacturing inventory [35] - Comprehensive: In October, the composite PMI index was 50, a change of -0.6 from the previous month and -0.8 from the same period last year, indicating a decline in the overall economic sentiment [35]

Group 1: Manufacturing Sector - In October, the Manufacturing Purchasing Managers' Index (PMI) was 49.0%, a decrease of 0.8 percentage points from the previous month, indicating a slowdown in manufacturing production activities [1] - The production index and new orders index for manufacturing were 49.7% and 48.8%, down 2.2 and 0.9 percentage points respectively, reflecting a decline in production and market demand [1] - High-tech manufacturing, equipment manufacturing, and consumer goods industries had PMIs of 50.5%, 50.2%, and 50.1% respectively, remaining in the expansion zone and significantly above the overall manufacturing level [1] Group 2: Enterprise Size Impact - The PMIs for large, medium, and small enterprises were 49.9%, 48.7%, and 47.1%, showing a decline of 1.1, 0.1, and 1.1 percentage points respectively, indicating a decrease in economic sentiment across all sizes [2] - Large enterprises maintained production and new orders indices at 50.9% and 50.1%, respectively, remaining in the expansion zone for six consecutive months [2] Group 3: Non-Manufacturing Sector - The Non-Manufacturing Business Activity Index was 50.1%, an increase of 0.1 percentage points from the previous month, indicating stability in non-manufacturing operations [2][3] - The service sector's business activity index rose to 50.2%, reflecting a slight recovery in service sector activity, while the construction sector's index fell to 49.1%, indicating a decline in construction activity [2][3] Group 4: Economic Outlook - The stability in non-manufacturing activities is supported by holiday consumption, with positive performance in travel, shopping, tourism, and dining sectors [3] - The gradual release of policies aimed at stabilizing growth is expected to strengthen domestic demand in the fourth quarter, providing solid support for achieving annual economic and social development goals [3]

Core Insights - The manufacturing Purchasing Managers' Index (PMI) for October is at 49.0%, a decrease of 0.8 percentage points from the previous month, indicating a slowdown in manufacturing activity [1] - The non-manufacturing business activity index is at 50.1%, an increase of 0.1 percentage points from last month, suggesting stability in the non-manufacturing sector [1] - The comprehensive PMI output index is at 50.0%, down 0.6 percentage points from the previous month, reflecting overall economic stability [1] Manufacturing Sector - Manufacturing production and market demand have declined, with production index at 49.7% and new orders index at 48.8%, down 2.2 and 0.9 percentage points respectively [1] - Factors contributing to the slowdown include international trade uncertainties and seasonal factors related to holidays, which historically affect October production levels [1] - High-tech manufacturing, equipment manufacturing, and consumer goods industries have PMIs of 50.5%, 50.2%, and 50.1% respectively, indicating continued expansion and support for the manufacturing sector [1] Enterprise Size Analysis - The PMIs for large, medium, and small enterprises are 49.9%, 48.7%, and 47.1%, showing varying degrees of decline [2] - Large enterprises maintain production and new orders indices at 50.9% and 50.1%, respectively, indicating sustained expansion for six consecutive months [2] - Positive changes in market prices within the manufacturing sector are noted, with equipment manufacturing purchase and factory price indices rising for three consecutive months [2] Non-Manufacturing Sector - The non-manufacturing business activity index has increased to 50.1%, indicating expansion, with the service sector index at 50.2% [2][3] - The construction sector's business activity index is at 49.1%, reflecting a slight decline in activity [2] - Consumer spending in areas such as travel, shopping, and dining has shown positive performance, supporting the stability of the non-manufacturing sector [3] Economic Outlook - The stability in non-manufacturing activities is supported by holiday consumption, with investment and consumption-related activities showing positive changes [3] - The effectiveness of growth-stabilizing policies is expected to strengthen domestic demand in the fourth quarter, providing solid support for achieving annual economic and social development goals [3]

Core Insights - The manufacturing Purchasing Managers' Index (PMI) for October is at 49.0%, a decrease of 0.8 percentage points from the previous month, indicating a slowdown in manufacturing activity [1] - The non-manufacturing business activity index is at 50.1%, an increase of 0.1 percentage points from last month, suggesting stability in the non-manufacturing sector [2] - The comprehensive PMI output index is at 50.0%, down 0.6 percentage points from the previous month, reflecting overall economic stability [1] Manufacturing Sector - Manufacturing production and new orders indices are at 49.7% and 48.8%, respectively, down 2.2 and 0.9 percentage points from last month, indicating a decline in production and market demand [1] - High-tech manufacturing, equipment manufacturing, and consumer goods industries have PMIs of 50.5%, 50.2%, and 50.1%, respectively, all remaining in the expansion zone and significantly above the overall manufacturing level [1] Enterprise Size Analysis - The PMIs for large, medium, and small enterprises are 49.9%, 48.7%, and 47.1%, showing a decline of 1.1, 0.1, and 1.1 percentage points, respectively, indicating a decrease in economic sentiment across all sizes [2] - Large enterprises have production and new orders indices at 50.9% and 50.1%, respectively, remaining in the expansion zone for six consecutive months, indicating sustained production and demand [2] Non-Manufacturing Sector - The non-manufacturing business activity index is at 50.1%, up 0.1 percentage points, indicating continued stability in non-manufacturing operations [2] - The service sector business activity index is at 50.2%, reflecting a slight increase and improved sentiment in the service industry [2] - The construction industry business activity index is at 49.1%, down 0.2 percentage points, indicating a decline in construction activity [2] Economic Outlook - The slight increase in the business activity index for October suggests stable operations in the non-manufacturing sector, supported by holiday consumption and positive changes in investment and consumption-related activities [3] - The effectiveness of growth-stabilizing policies is expected to strengthen domestic demand in the fourth quarter, providing solid support for achieving annual economic and social development goals [3]

Core Insights - The manufacturing Purchasing Managers' Index (PMI) for October is at 49.0%, a decrease of 0.8 percentage points from the previous month, indicating a slowdown in manufacturing activity [1] - The non-manufacturing business activity index is at 50.1%, an increase of 0.1 percentage points from last month, suggesting stability in the non-manufacturing sector [1] - The comprehensive PMI output index is at 50.0%, down 0.6 percentage points from the previous month, reflecting overall economic stability [1] Manufacturing Sector - Manufacturing production and new orders indices are at 49.7% and 48.8%, respectively, down 2.2 and 0.9 percentage points from last month, indicating a decline in production and market demand [1] - High-tech manufacturing, equipment manufacturing, and consumer goods industries have PMIs of 50.5%, 50.2%, and 50.1%, respectively, all remaining in the expansion zone and significantly above the overall manufacturing level [1] Enterprise Size Analysis - The PMIs for large, medium, and small enterprises are 49.9%, 48.7%, and 47.1%, showing a decline of 1.1, 0.1, and 1.1 percentage points, respectively, indicating varying levels of economic activity [2] - Large enterprises have production and new orders indices at 50.9% and 50.1%, respectively, remaining in the expansion zone for six consecutive months [2] Price Trends - The equipment manufacturing purchase price index and factory price index have risen for three consecutive months, with the factory price index reaching a new high since June 2024 [2] - High-tech manufacturing purchase and factory price indices have also increased, with the factory price index hitting a new high for the year [2] Non-Manufacturing Sector - The non-manufacturing business activity index is at 50.1%, indicating a slight increase and stability in operations [3] - The service sector business activity index is at 50.2%, reflecting a recovery in service sector activity, while the construction sector index is at 49.1%, showing a decline [2][3] Consumer Behavior - Holiday consumption has supported the stability of the non-manufacturing sector, with positive performance in travel, shopping, tourism, and dining [3] - Investment and consumption-related activities are showing positive changes, contributing to the overall economic stability [3]

1. Report Industry Investment Rating No information provided in the given content. 2. Core Viewpoints of the Report - In October 2025, the decline of manufacturing PMI, weaker than the seasonal level and with weakening supply and demand, may indicate certain downward pressure on the Q4 economy [2][7]. - Both domestic and external demands declined, and price indicators did not continue the improvement trend of last month. The differentiated structure of "strong raw material prices and weak finished - product prices" may restrict the repair of corporate profits [2][7]. - The business climate of large enterprises fell below the boom - bust line, and the business climates of high - tech manufacturing and equipment manufacturing industries significantly declined [2][7]. - The business climate of the non - manufacturing industry is mainly driven by holiday service consumption, and the overall expansion strength is still weak [2][7]. - The trading logic of the bond market in Q4 focuses on the weakening economic fundamentals and the expectation of monetary easing, and a repair market may be welcomed. It is expected that the yield of the active 10 - year treasury bond (tax - exempt) may decline to 1.65% - 1.7%, and the yield of the taxable bond may decline to 1.7% - 1.75% [2][7]. 3. Summary by Relevant Catalogs 3.1 Event Description - In October 2025, the manufacturing PMI was 49.0%, a decrease of 0.8 pct from the previous month, lower than the Wind consensus forecast of 50.0%. The non - manufacturing business activity index slightly increased by 0.1 pct to 50.1%, slightly higher than the boom - bust line and lower than the Wind consensus forecast of 50.3%. Among them, the service industry business activity index was 50.2%, an increase of 0.1 pct, and the construction industry business activity index was 49.1%, a decrease of 0.2 pct [5]. 3.2 Event Comment - **Manufacturing PMI and economic pressure**: The manufacturing PMI in October 2025 fell back to a nearly two - year low. The production index and new order index decreased by 2.2 pct and 0.9 pct respectively to 49.7% and 48.8%. The procurement volume index decreased significantly by 2.6 pct to 49.0%, and the difference between the "finished - product inventory - on - hand orders" index widened by 0.6 pct to 3.6 pct. The weak pattern of production and demand was partly due to the pre - release of some demand before the National Day holiday and partly reflected the lack of endogenous momentum, indicating certain downward pressure on the Q4 economy [7]. - **Demand and price situation**: In October, external demand did not continue its resilience, and the new export order index significantly declined by 1.9 pct to 45.9%. The new order index for domestic demand also turned from rising to falling. The main raw material purchase price index and the ex - factory price index both decreased by 0.7 pct, recording 52.5% and 47.5% respectively. The difference between them remained at 5.0 pct, and the main raw material purchase price index was still in the expansion range. The "strong raw material prices and weak finished - product prices" structure may restrict the repair of corporate profits [7]. - **Enterprise and industry changes**: Among enterprises, the PMIs of large and small enterprises both fell by 1.1 pct to 49.9% and 47.1% respectively, and the PMI of medium - sized enterprises slightly fell by 0.1 pct to 48.7%. In terms of industries, the PMIs of high - tech manufacturing and equipment manufacturing industries were 50.5% and 50.2% respectively, a decline of 1.1 pct and 1.7 pct from the previous month. The consumer goods industry remained in the expansion range, slightly falling by 0.5 pct to 50.1%, while the PMI of the basic raw material industry further dropped to 47.3%. The overall market expectation was optimistic, with the production and business activity expectation index at 52.8%, and the expectation indexes of industries such as non - ferrous metals and transportation equipment rising to the high - level boom range above 60% [7]. - **Non - manufacturing industry situation**: In October, the non - manufacturing PMI slightly increased by 0.1 pct to 50.1%, and the service industry PMI rose to 50.2%. The on - hand order index fell by 0.8 pct while the new order index remained flat, indicating that the holiday effect was the main driver. The business activity indexes of industries such as transportation, accommodation, and culture and entertainment were all in the high - level boom range above 60%, but industries such as real estate continued to be sluggish. The construction industry business activity index turned from rising to falling, decreasing by 0.2 pct to 49.1%, possibly dragged down by the slowdown of holiday construction and the decline of post - holiday real estate sales [7]. - **Bond market outlook**: Currently, the endogenous momentum for the repair of production and demand may be limited. On the day when the PMI data was released, the yield of the 10 - year treasury bond active bond decreased by 0.95 BP. The economic fundamentals still face a pattern of weak supply and demand, the pressure on enterprises for passive inventory replenishment continues, and the ex - factory - raw material price gap still restricts the repair of corporate profits. Although 500 billion yuan of new policy - based financial instruments have been put in place and local governments have an additional 200 billion yuan of special bond quotas, the sustainability of the recovery of real estate sales and the transmission effect of policy funds on infrastructure investment still need to be observed. The trading logic of the bond market in Q4 focuses on the weakening economic fundamentals and the expectation of monetary easing, and a repair market may be welcomed. It is expected that the yield of the active 10 - year treasury bond (tax - exempt) may decline to 1.65% - 1.7%, and the yield of the taxable bond may decline to 1.7% - 1.75% [7].

Group 1 - The manufacturing Purchasing Managers' Index (PMI) for October is 49.0%, a decrease of 0.8 percentage points from the previous month, indicating a slowdown in manufacturing activity [1] - The non-manufacturing business activity index is at 50.1%, an increase of 0.1 percentage points from last month, suggesting stability in the non-manufacturing sector [1] - The comprehensive PMI output index is 50.0%, down 0.6 percentage points from the previous month, reflecting overall economic stability [1] Group 2 - In October, the production index and new orders index for manufacturing are 49.7% and 48.8%, respectively, showing declines of 2.2 and 0.9 percentage points from last month, indicating reduced production and market demand [1] - Factors contributing to the slowdown include international trade uncertainties and seasonal factors related to holidays, which historically lead to a decline in production indices in October [1] - High-tech manufacturing, equipment manufacturing, and consumer goods industries have PMIs of 50.5%, 50.2%, and 50.1%, respectively, all remaining in the expansion zone and significantly above the overall manufacturing level [1] Group 3 - The PMIs for large, medium, and small enterprises are 49.9%, 48.7%, and 47.1%, respectively, with all showing declines from the previous month, indicating varying levels of economic activity [2] - Large enterprises have production and new orders indices of 50.9% and 50.1%, respectively, remaining in the expansion zone for six consecutive months, indicating sustained production and demand [2] - The equipment manufacturing purchase price index and factory price index have risen for three consecutive months, with the factory price index reaching a new high since June 2024 [2] Group 4 - The non-manufacturing business activity index has increased to 50.1%, indicating a stable operating environment, supported by holiday consumption trends [3] - The service sector business activity index is at 50.2%, reflecting a slight recovery in service sector activity [2][3] - Investment and consumption-related activities are showing positive changes, with strong performance in travel, shopping, and entertainment sectors, contributing to overall economic stability [3]

Group 1: Economic Growth and Projections - The "14th Five-Year Plan" emphasizes economic growth, with a projected GDP target of around 5% for 2026, aligning with a potential annual growth rate of 4.17% needed to meet the 2035 goals[3][10][14] - The potential economic growth rate during the "14th Five-Year Plan" period is estimated to be between 4.8% and 5.0%[12][14] - The focus on expanding domestic demand is expected to stimulate consumption, benefiting service consumption and upgrades in rural and lower-tier cities[3][21] Group 2: Supply and Demand Dynamics - On the supply side, enhancing high-quality service provision is crucial to unlocking service consumption potential, with a service trade restrictiveness index (STRI) of 0.225, higher than the OECD average of 0.19[4][46] - The manufacturing sector is expected to address excess capacity through "anti-involution" measures, with an estimated industrial added value of approximately 5 trillion yuan, accounting for 12.8% of industrial enterprises[4][54] - The demand side anticipates limited recovery in fixed asset investment, with infrastructure investment growth expected to remain stable[5][24] Group 3: External and Internal Demand - External demand is projected to remain stable, with U.S. exports expected to grow by around 2% year-on-year in 2026, supported by stable consumption growth and AI investments[5][61] - Domestic consumption is anticipated to shift towards service consumption, with service consumption expected to account for 46.1% of total household consumption by 2024[25][29] - The government aims to enhance public service spending to boost residents' consumption capacity, particularly in the context of common prosperity[32][29] Group 4: Macroeconomic Policies - Monetary policy is expected to be moderately accommodative, with potential interest rate cuts and reserve requirement ratio reductions to support economic stability[7][7] - The fiscal policy is projected to become more proactive, with a potential increase in the deficit ratio to 4.2% and an expansion of the broad deficit by approximately 1.7 trillion yuan[7][7] - The government plans to optimize tax structures and improve the relationship between central and local finances to enhance fiscal sustainability[7][7] Group 5: Risks and Considerations - Key risks include domestic policies falling short of expectations, potential overperformance of the U.S. economy, and the possibility of renewed trade tensions[7][7]