Core Viewpoint - The article discusses the necessity of regulating industrial policies and controlling local governments' enthusiasm for industrial investment while emphasizing the need for further efforts to stimulate consumption [3][22]. Group 1: PPI Trends - Since October 2022, China's PPI has entered a continuous negative growth phase, experiencing 34 months of decline, which has pressured industrial profits and suppressed consumer spending [3][4]. - The current PPI negative growth is compared to a previous cycle from March 2012 to August 2016, which lasted 54 months, highlighting similarities in duration and abrupt declines [4][5]. - The current PPI decline is driven by two main factors: overcapacity in industries like photovoltaics and lithium batteries due to rapid demand growth, and significant adjustments in the real estate market since the second half of 2021 [5][6]. Group 2: Demand and Supply Dynamics - Both rounds of PPI decline are characterized by rapid capacity expansion exceeding demand growth, leading to oversupply, but the causes of demand insufficiency differ [6][11]. - The current round of PPI decline has seen a more significant impact from weak consumer demand, particularly in the context of the real estate market's deep adjustments, which have led to substantial wealth evaporation for residents [6][12]. Group 3: Industry Contributions to PPI Decline - The mining and upstream raw materials sectors contributed significantly to PPI declines in both periods, but their contribution decreased from 85.2% to 61.7% in the current cycle [11]. - The midstream manufacturing sector's contribution to PPI decline increased to 9.0% due to the overcapacity in the new energy sector, while the downstream manufacturing sector's contribution rose to 26.0%, particularly from essential consumer goods [11][12]. Group 4: Consumer Demand Analysis - The current cycle's core CPI has averaged around 0.3%, significantly lower than the previous cycle's average of 2.1%, indicating a substantial drop in consumer demand [13][14]. - Factors contributing to weak consumer demand include declining disposable income growth, increased savings tendencies, and unstable income expectations, leading to reduced consumption even with unchanged income levels [17][19]. Group 5: Policy Recommendations - To reverse the PPI negative growth, stronger counter-cyclical adjustment policies are needed, including lowering policy interest rates and expanding public investment [21][23]. - Enhancing consumer confidence through effective policies can lead to increased consumption, which is crucial for reversing the downward trend in downstream manufacturing prices and ultimately improving PPI [23][24].

1. Report Industry Investment Rating - No relevant content provided 2. Core View of the Report - In April 2025, the inventory cycle of the entire industrial sector shifted to "active destocking" [2][15][16] - The upstream, mid - stream, and downstream industries all entered the "active destocking" phase in April 2025 [2][17][18] 3. Summary by Relevant Catalogs 3.1 Inventory Cycle Overview - In April 2025, the year - on - year growth rate of finished product inventory of industrial enterprises decreased by 0.3 percentage points to 3.9% [7][8][9] 3.2 Inventory Cycle Overview (by Industry) - **Upstream Industry**: It accounts for only 2% of the total inventory and returned to "active destocking" in April 2025 after three months [17] - **Mid - stream Industry**: It accounts for 54% of the total inventory, and most of it was in the "active destocking" phase in April 2025 [18] - **Downstream Industry**: It accounts for 43% of the total inventory and was in the "active destocking" phase in April 2025 [19] - **Specific Industries**: In April 2025, electronics was in "passive restocking", electrical machinery was in "active restocking", chemical was in "passive restocking", paper - making, automotive, non - ferrous metals, instrument and meter, and general equipment were in "active destocking" [7]