Core Viewpoint - The 20th Central Committee of the Communist Party of China is reviewing the suggestions for the 15th Five-Year Plan, aiming to achieve significant breakthroughs in strategic tasks related to Chinese-style modernization over the next five years [1] Economic Growth and Achievements - During the 14th Five-Year Plan, China's GDP has consistently crossed significant thresholds, reaching approximately 140 trillion yuan in 2023, contributing around 30% to global economic growth [2][3] - China's GDP is projected to reach about 135 trillion yuan in 2024, maintaining a 17.1% share of the global economy, with an average annual growth rate of 5.5%, significantly higher than the global average of 3.9% [3] - The total retail sales of consumer goods in China are expected to reach 48.3 trillion yuan in 2024, with a forecast to exceed 50 trillion yuan in 2025, solidifying its position as the world's second-largest consumer market [6] Domestic Demand and Consumption - Domestic demand has become a major driver of economic growth, contributing an average of 86.8% to economic growth from 2021 to 2024, with final consumption expenditure contributing 59.9% [3][5] - The government has implemented strategies to boost consumption, including tax deductions for childcare and education, and plans to issue long-term special bonds to fund major projects [5] Innovation and Technology - China's R&D expenditure is projected to exceed 3.6 trillion yuan in 2024, marking a 48% increase since 2020, with enterprises accounting for over 77% of this investment [9] - The country aims to transition from a "catch-up" approach to a "leading" position in technology innovation by 2035, focusing on building a self-controlled system for research and industrialization [13] Social Welfare and Employment - The government has prioritized employment, maintaining over 12 million new urban jobs annually during the 14th Five-Year Plan, with an average urban unemployment rate of 5.3% [15] - By 2024, the per capita disposable income of residents is expected to reach 41,000 yuan, reflecting a growth rate of 5.5% after adjusting for inflation [15] Education and Healthcare - Education spending has consistently remained above 4% of GDP, with significant improvements in enrollment rates across various education levels [16] - By the end of 2024, the number of medical institutions in China is expected to reach 1.09 million, with over 95% of residents able to access medical services within 15 minutes [17]

Economic Growth - China's GDP is projected to reach 140 trillion yuan in 2023, up from 103 trillion yuan in 2020, achieving an increment of over 35 trillion yuan in five years, equivalent to recreating the Yangtze River Delta [1] - The average annual economic growth rate is 5.5%, contributing approximately 30% to global economic growth [1] Innovation and Technology - Research and development investment intensity is expected to increase to 2.68% in 2024, surpassing the overall level of the European Union [1] - Significant technological achievements include the successful commercial flight of the C919 aircraft and advancements in human-like robots and innovative pharmaceuticals [1] Consumer Behavior - Consumer spending has increased by 4 trillion yuan, driven by enhanced confidence from government initiatives such as childcare subsidies and pension increases [2] - New consumption trends are emerging in areas like sports tourism and cultural experiences, reflecting a shift in consumer willingness to spend [2] Renewable Energy and Green Transition - China has established the world's largest and fastest-growing renewable energy system, with total electricity consumption surpassing 1 trillion kilowatt-hours [2] - The country leads globally in the ownership, production, and charging infrastructure of electric vehicles [2] Global Trade and Cultural Influence - China's total goods trade has exceeded 40 trillion yuan, showcasing an expanding global trade network [2] - Chinese cultural products, such as the animated film "Nezha," have achieved significant international success, indicating a growing global cultural influence [2][3] Investment Sentiment - Several international investment banks have upgraded their ratings on Chinese assets to "overweight," leading to increased foreign capital inflow into China [3] - The ongoing economic momentum is viewed as a starting point for future growth, with expectations for continued positive developments in the upcoming five-year plan [3]

Group 1 - Trump's recent ultimatum to 17 global pharmaceutical companies demands significant reductions in drug prices in the U.S. within 60 days, causing market volatility [1] - The policy aims to implement a "most favored nation" mechanism, requiring European and other countries to increase drug payments while the U.S. lowers its payments, potentially stabilizing total revenue for pharmaceutical companies and encouraging them to enhance R&D efficiency [1] - The true target of Trump's policy is not the pharmaceutical companies themselves, but the insurance and pharmacy benefit management (PBM) sectors, aiming to eliminate intermediaries to reduce drug prices at the consumer level [1] Group 2 - Current domestic companies primarily utilize the out-licensing (BD) model for international expansion, which is relatively insulated from U.S. drug price policy changes [2] - Even with potential structural adjustments in U.S. drug pricing, the long-term trend of Chinese innovative drugs going global remains unchanged [2] - Investors are advised to seize short-term pullback opportunities for strategic investments in innovative pharmaceuticals, focusing on companies with differentiated innovation capabilities and established international experience [2]

Core Viewpoint - The Hong Kong stock market opened higher, driven by gains in large technology and pharmaceutical stocks, with significant increases in various individual stocks and a notable rise in the Hong Kong Technology ETF [1] Group 1: Market Performance - The Hong Kong Technology ETF (159747) rose by 2.70%, with a year-to-date increase of over 26% [1] - Notable individual stock performances include King’s Ray Biotechnology up over 15%, MicroPort Medical up over 8%, and Kintor Pharmaceutical, among others, also showing strong gains [1] Group 2: Pharmaceutical Sector Insights - The U.S. is reportedly "buying" Chinese innovative drugs amid tariff concerns, with a significant increase in licensing agreements from multinational pharmaceutical companies recognizing Chinese biotech [1] - According to Stifel's report, approximately 30% of drugs licensed by large pharmaceutical companies in 2023 and 2024 will come from Chinese biotech firms, up from 12% in the previous two years [1] Group 3: Financial Trends in Innovative Drugs - The total value of innovative drug business development (BD) transactions is projected to rise from $9.2 billion in 2020 to $52.3 billion in 2024, with upfront payments increasing from $600 million to $4.1 billion [1] - From early 2025 to the present, the total value of innovative drug overseas transactions has reached $45.5 billion, with upfront payments hitting $2.2 billion, indicating a potential record year [1] Group 4: Technology Sector Outlook - Hong Kong stocks are expected to benefit from the scarcity of leading technology stocks amid the AI industry transformation, with strong growth in capital expenditure and cloud business revenue among leading internet companies [1] - The current valuation levels of Hong Kong technology stocks are considered not high, with strong earnings growth expected in the sector by 2025, suggesting potential improvements in return on equity (ROE) and subsequent valuation increases [1]