Core Viewpoint - The Chinese National Market Regulation Administration has reported that 35 Chinese automotive standards have been adopted by multiple countries, highlighting the increasing international acceptance of Chinese standards in the automotive sector, particularly in electric vehicles [1][2]. Group 1: Adoption of Standards - 35 Chinese automotive standards have been adopted by countries such as Chile, Ecuador, and Nigeria, covering areas like safety, battery systems, and charging devices [1]. - The growing demand for Chinese standards from trade partners is driven by the rising popularity of Chinese electric vehicles in overseas markets [1]. Group 2: Role in Belt and Road Initiative - The standardization efforts are playing a foundational and leading role in promoting the Belt and Road Initiative, facilitating international trade in electric vehicles [1][2]. - The Chinese market regulation department has achieved significant results by promoting "soft connectivity" of standards to enhance "hard connectivity" and "heart connectivity" [1]. Group 3: International Standardization - China has led the development of international standards in smart manufacturing, including large-scale personalized customization and industrial network buses, which have been adopted by multiple countries [2]. - The establishment of a specialized group for civil aviation standards between China and Russia has resulted in the mutual recognition of 307 civil aviation standards, laying a solid foundation for technical exchanges and cooperation in the aviation sector [2]. Group 4: Future Plans - The market regulation department plans to accelerate the "soft connectivity" of standards along the Belt and Road, focusing on the internationalization needs of advanced manufacturing industries [2]. - There will be an emphasis on deepening standardization cooperation with Belt and Road countries, increasing the supply of Chinese standards in foreign languages, and implementing standardization capacity-building projects and overseas application pilot projects [2].

Investment Rating - The report maintains an "Overweight" rating for the defense and military industry [3] Core Insights - The new forms of warfare are driving demand for advanced weaponry, characterized by "intelligent, systematic, and informational" capabilities, which are becoming critical for major power strategic competition [2][25] - Global military spending is projected to reach $2.718 trillion in 2024, marking a 9.4% year-on-year increase, the highest growth since the Cold War, and has been rising for ten consecutive years, providing a solid material foundation for the military industry [2][26][27] - The report highlights the increasing importance of low-cost military equipment, as demonstrated in the Russia-Ukraine conflict, prompting nations to focus on cost-effectiveness in military procurement [28][29] Summary by Sections New Warfare Forms Create New Demands - Recent international conflicts have highlighted the need for new types of weaponry, with a focus on unmanned systems, information warfare, and electronic warfare [2][25] - The military industry is experiencing a transformation driven by the evolving nature of warfare, leading to new demands and trade systems [2][3] Global Military Spending Trends - Military spending is expected to grow significantly, with the top five spenders being the USA, China, Russia, Germany, and India [26][27] - The report notes that military spending is a primary source of funding for the military industry, particularly for equipment expenses [27] Cost-Effectiveness in Military Procurement - The report emphasizes the need for low-cost solutions in military equipment, as seen in the effectiveness of low-cost drones during high-intensity conflicts [28][29] - It discusses the importance of considering total lifecycle costs, including procurement, maintenance, and operational costs, in military equipment development [29][30] Index Component Adjustments - Recent adjustments to major indices have resulted in several military industry stocks being added, which may lead to increased market attention and potential capital inflows [12] Investment Recommendations - The report suggests focusing on sectors such as unmanned equipment, military intelligence, satellite internet, and electronic countermeasures for investment opportunities [15][16] - Specific companies and sectors within the military equipment supply chain, such as fighter jets, drones, and missile systems, are highlighted as potential investment targets [15][16]