Group 1 - The domestic economy shows positive changes as the Consumer Price Index (CPI) increased by 0.4% month-on-month in July, reversing a previous decline of 0.1%, while year-on-year it remained flat [1] - The Producer Price Index (PPI) saw a narrowing decline of 0.2% month-on-month, with a year-on-year decrease of 3.6%, indicating an improvement in market supply and demand relationships [1] - The expansion of domestic demand policies is having a noticeable effect, leading to marginal improvements in price movements [1] Group 2 - The core CPI rose by 0.8% year-on-year in July, marking the highest level since March 2024, reflecting enhanced market vitality and smoother economic circulation [3] - Service prices significantly contributed to the CPI increase, with airfares, tourism, hotel accommodations, and transportation rental fees rising by 17.9%, 9.1%, 6.9%, and 4.4% respectively, collectively accounting for over 60% of the CPI's month-on-month increase [3] - Industrial consumer goods prices also showed positive trends, with a 0.2% month-on-month increase excluding energy, driven by demand recovery from consumption policies [3] Group 3 - The month-on-month decline in the PPI has narrowed for the first time since March, indicating a stabilization in industrial product prices due to improved market competition [4] - Key industries such as coal, steel, photovoltaic, cement, and lithium battery sectors have seen reduced price declines, contributing to a decrease in the downward pressure on the PPI [4] - Prices of representative "anti-involution" goods like coking coal, rebar, polysilicon, and lithium carbonate have entered a strong upward cycle, positively impacting the PPI [4] Group 4 - International factors are also positively influencing industrial product prices, with oil and gas extraction prices rising by 3.0% and non-ferrous metal smelting and rolling prices increasing by 0.8% [4] - The transformation and upgrading of industries are driving price recoveries in related sectors, with caustic soda prices up by 3.6% and a reduced decline in glass manufacturing prices by 0.9% [4] - The release of domestic demand potential is leading to year-on-year price increases in certain industries, such as a 13.1% rise in the manufacturing of arts and crafts and a 5.3% increase in sports balls manufacturing [4]

Economic Performance Overview - China's GDP growth for the first half of 2025 stands at 5.3%, reflecting a steady performance amidst complex economic conditions [2][3] - The industrial added value for large-scale enterprises increased by 6.4% year-on-year, indicating robust industrial activity [3] - The total retail sales of consumer goods grew by 5.0%, showcasing resilience in the consumption market despite a slight slowdown in June [3] Trade and Financial Indicators - The total import and export volume reached 21.79 trillion yuan, a year-on-year increase of 2.9%, highlighting China's strong connection with global markets [3] - The cumulative increase in social financing reached 22.83 trillion yuan, with RMB loans increasing by 12.92 trillion yuan, supporting the real economy [3] Consumption and Investment Dynamics - Final consumption expenditure contributed 52% to economic growth, marking it as the primary driver of the economy [5] - Fixed asset investment growth was recorded at 2.8%, with real estate investment declining by 11.2%, indicating cautious corporate investment behavior [5][6] - Private investment, excluding real estate, grew by 5.1%, suggesting potential for recovery if the business environment improves [6] Price Trends - The Consumer Price Index (CPI) showed a slight year-on-year increase of 0.1% in June, ending a four-month decline, while the Producer Price Index (PPI) fell by 3.6% [7][8] - Price recovery in sectors such as energy and automobiles indicates a gradual warming of the economy, although traditional sectors continue to face downward pressure [7][8] Future Outlook - The economic trajectory is expected to follow a U-shaped pattern, with potential challenges in the second half of the year, particularly in real estate and traditional industries [10] - Policy directions from the central government aim to optimize urban structures and promote service industries, which could support economic stability and growth [10]

Core Viewpoint - Despite the easing of trade tensions, the private sector's risk appetite has rebounded and then declined, with limited progress in balance sheet repair, leading to persistently low inflation. The key to inflation recovery lies internally rather than externally, with more proactive policy measures expected in the second half of the year [1]. CPI Analysis - CPI remained low in May, with seasonal declines in food prices and input pressures from international oil prices. Service prices showed resilience, leading to an expanding gap between CPI and core CPI year-on-year [1][2]. - The transportation and communication prices decreased due to national subsidies and falling oil prices, which significantly impacted May's CPI. Core CPI remained flat at 0.0% month-on-month, with a slight year-on-year increase to 0.6% [3]. PPI Analysis - PPI recovery faced multiple constraints, including a decline in international commodity prices affecting domestic industries, particularly in oil and gas extraction, which saw significant month-on-month price drops [4][5]. - Adverse weather conditions impacted the peak season for coal demand, leading to a continued weakening trend in extraction prices, with construction materials like cement and rebar also showing notable declines in May [5]. - A slight month-on-month decline in exports exacerbated supply-demand mismatches, with tariff impacts on exports becoming more apparent. The easing of trade tensions has not significantly aided the repair of private sector balance sheets, as evidenced by a drop in risk appetite indicators [6].