Global Economic Trends - Global economic growth is expected to be 2.8% in 2025, which is 0.4 percentage points lower than the average growth rate from 2010 to 2019[14] - The World Bank predicts a global economic growth of only 2.3% in 2025, down from earlier forecasts[15] - International trade growth is anticipated to decline, with a projected decrease of 0.2% in global merchandise trade volume in 2025[16] China's Economic Outlook - China's GDP is projected to grow by approximately 4.7% in the second half of 2025, with a nominal GDP growth of 4.3% in the first half[27][28] - The Consumer Price Index (CPI) may turn negative in the second half of 2025, while the Producer Price Index (PPI) is expected to decline by around 3.0% for the year[30] - The unemployment rate for urban areas averaged 5.2% in the first half of 2025, reflecting a slight increase from the previous year[27] A-Share Market Performance - A-share companies' overall market value creation ability decreased by nearly 40 basis points in 2024 compared to 2023[40] - The performance of A-share companies is increasingly diverging from nominal GDP growth, particularly in the manufacturing sector[40] - The return on assets (ROA) and return on equity (ROE) for A-share companies continued to decline in 2024[40] Sector-Specific Insights - The first industry saw a significant recovery in asset returns due to rising pork prices, while the second and third industries experienced declines[10] - R&D investment in some sectors continued to rise in 2024, although some industries began to see a decrease[10] - The manufacturing sector is facing severe "involution" competition, impacting profitability and pricing power[30]

Core Insights - The China SME Development Index for July remains stable at 89.0, indicating a steady performance amidst external uncertainties and slow domestic demand growth [1] - The index shows a positive trend in various sectors, with six industries experiencing growth while two saw slight declines [1] Industry Performance - The construction, transportation, real estate, social services, information transmission software, and accommodation and catering sectors all reported significant increases in their indices, rising by 0.6, 0.4, 0.3, 0.3, 0.3, and 0.3 points respectively [1] - The industrial and wholesale retail sectors experienced minor declines of 0.2 and 0.1 points respectively [1] Financial Conditions - The financial situation for SMEs has improved, with the funding index rising by 0.2 points in July [1] - There is an increase in working capital and a faster turnover of accounts receivable, with six out of eight surveyed industries reporting growth in working capital and quicker collection of receivables [1] Investment Sentiment - Investment willingness among SMEs has shown signs of recovery, with the investment index increasing by 0.1 points in July [1] - Six out of the eight surveyed industries reported an increase in their investment indices [1] Future Outlook - The China SME Association emphasizes the need for comprehensive economic reforms to stimulate domestic demand, foster new growth points in service consumption, and enhance private and SME investment vitality [2] - The focus will be on stabilizing employment, businesses, markets, and expectations to support the innovative development and quality improvement of private and small enterprises [2]

Group 1 - The China SME Development Index for July is 89.0, remaining stable compared to the previous month, indicating a steady but pressured performance of SMEs amid external uncertainties and slow domestic demand growth [1] - In July, the industry index showed 6 sectors rising and 2 declining, with notable increases in construction, transportation, real estate, social services, information transmission software, and accommodation and catering sectors, rising by 0.6, 0.4, 0.3, 0.3, 0.3, and 0.3 points respectively [1] - The funding situation for SMEs improved in July, with the funding index rising by 0.2 points, indicating better liquidity and faster accounts receivable turnover across 6 out of 8 surveyed industries [1] Group 2 - The investment willingness of SMEs showed signs of recovery, with the investment index increasing by 0.1 points in July, as 6 out of 8 surveyed industries reported an increase in investment [1] - The China SME Association emphasizes the need for comprehensive economic reforms to effectively release domestic demand potential, stimulate private investment, and support the innovation and quality improvement of SMEs [2]

Group 1 - The China SME Development Index for July is 89.0, remaining stable compared to the previous month, indicating that SMEs are facing significant external uncertainties and slow domestic demand growth [1] - In July, the index for six industries increased, while two industries saw a decline, suggesting an overall positive trend in industry operations [1] - The construction, transportation, real estate, social services, information transmission software, and accommodation and catering industries showed notable increases in their indices, rising by 0.6, 0.4, 0.3, 0.3, 0.3, and 0.3 points respectively [1] Group 2 - The funding situation for SMEs improved in July, with the funding index rising by 0.2 points, indicating better liquidity and faster accounts receivable turnover [1] - Investment willingness among SMEs has also increased, with the investment index rising by 0.1 points in July, reflecting a positive outlook in six out of eight surveyed industries [1] - The China SME Association emphasizes the need for comprehensive economic reforms to stimulate domestic demand, support private and small enterprises, and achieve the goals set for the 14th Five-Year Plan [2]

Core Viewpoint - The China Small and Medium Enterprises Development Index (SMEDI) for July remains stable at 89.0, unchanged from the previous month [1] Industry Summary - The index shows a positive trend in various sectors, with 6 industries experiencing growth and 2 industries seeing a decline [1] - Notable increases were observed in the construction, transportation, real estate, social services, information transmission software, and accommodation and catering industries, with respective increases of 0.6, 0.4, 0.3, 0.3, 0.3, and 0.3 points [1] - The industrial and wholesale retail sectors experienced slight declines of 0.2 and 0.1 points, respectively [1] - Overall, the operational status of the industries is improving [1]

Group 1 - The U.S. labor market showed unexpected weakness in July, with non-farm payrolls increasing by only 73,000 jobs, significantly below the market expectation of over 140,000 jobs [1] - The unemployment rate rose to 4.2%, an increase of 0.1 percentage points from the previous month [1] - The U.S. Labor Department revised down the employment figures for May and June, with a total downward revision of 258,000 jobs, indicating growing concerns about the slowdown in the U.S. economy [1] Group 2 - Job growth in July was primarily driven by the healthcare and social services sectors, which added 55,000 and 18,000 jobs respectively, while federal government employment continued to decline [1] - The average hourly wage for non-farm employees in July was $36.44, reflecting a month-over-month increase of 0.3% and a year-over-year increase of 3.9% [1] - The Federal Reserve officials expressed concerns about the labor market, noting that private sector job growth is nearly stagnant and that the labor market is showing signs of vulnerability [2]

Core Viewpoint - The China Small and Medium Enterprises Development Index (SMEDI) for Q2 2025 is reported at 89.1, a decrease of 0.4 points from the previous quarter, but higher than the levels in 2023 and 2024. Overall, costs for SMEs have slightly decreased [1]. Industry Summary - The wholesale and retail industry index remained stable at 89.0, while seven other industries, including construction, transportation, real estate, social services, information transmission, and accommodation and catering, saw declines in their indices [2][3]. - The overall index for Q2 2025 is 89.1, down from 89.5 in Q1 2025, with all sub-indices showing a decrease, including macroeconomic sentiment, comprehensive operation, market, cost, funding, labor, input, and efficiency indices [4][5]. Regional Summary - The indices for the eastern, central, and western regions are 90.1, 89.7, and 88.6 respectively, all showing declines from the previous quarter, while the northeastern region saw a slight increase of 0.1 points to 81.5 [4]. Key Characteristics of SMEs - Business confidence is low, with the macroeconomic sentiment index at 98.2, down 0.8 points from the previous quarter, reflecting a decline across all surveyed industries [5]. - Market demand is contracting, as indicated by a market index of 81.2, which is a decrease of 0.3 points from the previous quarter [5]. - Funding conditions are tightening, with the funding index at 100.6, down 0.2 points, and six out of eight industries reporting declines in their funding indices [5]. - Labor supply is increasing while demand is decreasing, with the labor index at 105.9, down 0.1 points, and seven industries reporting a drop in labor demand [5]. - Investment willingness among enterprises is declining, with the input index at 82.3, down 0.6 points, particularly in construction, social services, and accommodation and catering sectors [5]. - Costs for enterprises have slightly decreased, with the cost index at 111.8, down 0.2 points, although the wholesale and retail sector saw a slight increase in costs [5]. - Efficiency has also declined, with the efficiency index at 74.2, down 0.3 points, and six industries reporting a decrease in their efficiency indices [6].

Core Insights - The Small and Medium Enterprises Development Index (SMEDI) in China rose to 89.5 in May, an increase of 0.3 points from April, marking a significant recovery after two months of decline [1] - The improvement in the index is attributed to enhanced macroeconomic policies, better supply-demand relationships in certain industries, and a noticeable recovery in economic sentiment, which has positively influenced small and medium enterprises' performance and investment willingness [1] Economic Indicators - In May, various economic indices showed positive changes compared to April: - Macroeconomic sentiment index increased by 0.7 points - Comprehensive operation index rose by 0.6 points - Market index up by 0.2 points - Capital index increased by 0.3 points - Labor index grew by 0.2 points - Input index up by 0.4 points - Efficiency index increased by 0.4 points - The cost index remained stable compared to April, indicating a favorable trend in the operational environment for small and medium enterprises [1] Industry Performance - In May, several industries experienced growth compared to April: - Industrial sector increased by 0.6 points - Transportation sector rose by 0.6 points - Real estate sector up by 0.2 points - Wholesale and retail sector increased by 0.1 points - Information transmission and software sector grew by 0.4 points - Accommodation and catering sector also rose by 0.4 points - However, the construction and social services sectors saw declines of 0.2 points and 0.3 points, respectively, indicating a mixed performance across industries [1] Regional Analysis - The development indices for small and medium enterprises in May by region were as follows: - Eastern region: 90.5 - Central region: 90.3 - Western region: 88.7 - Northeastern region: 81.8 - The ongoing release of policy effects has led to a noticeable recovery in development expectations for small and medium enterprises, although challenges remain due to external uncertainties and the need for further domestic demand and consumption stimulation [2]