Core Viewpoint - The article discusses the looming risks of a real estate bubble in China, suggesting that the current market dynamics resemble a "musical chairs" game, indicating an impending end to speculative activities in the housing market [1][10]. Economic Downturn and Increased Savings - In 2022, the economic downturn and repeated pandemic impacts led to heightened public concerns about job security and income, resulting in a significant increase in the desire to save, with 61.8% of respondents in a survey indicating a preference for saving, up by 3.7 percentage points from the previous quarter [3]. - The increase in savings does not benefit all demographics equally, as the 15 trillion yuan in new deposits primarily flows to wealthier individuals who do not require housing, leaving low-income groups unable to afford homes [3]. High Housing Prices and Affordability Gap - The average price of new residential properties in December 2022 reached 16,177 yuan per square meter, while second-hand homes averaged 15,876 yuan per square meter, making it difficult for most families to afford homes, with typical residential purchases requiring down payments of 500,000 to 600,000 yuan [4]. - The suggestion to stimulate the economy through housing purchases may inadvertently encourage ordinary citizens to become "greater fools" in a high-price market, overlooking the realities of supply and demand [4]. Supply-Demand Imbalance in Real Estate Market - The real estate market is characterized by a significant oversupply, with 96% of households owning at least one property and 1.2 billion vacant homes available, indicating a supply far exceeding demand [6]. - The market is transitioning back to its fundamental purpose of providing housing rather than serving as an investment vehicle, as evidenced by the increasing number of cities entering an adjustment phase where speculative buying is losing its appeal [8]. Future Market Dynamics - The increase in affordable housing options is expected to divert demand away from the commercial housing market, leading to a segmentation of the real estate market into three categories: commercial housing, rental housing, and shared ownership housing [8]. - This segmentation is anticipated to curb speculative buying behaviors and promote healthier market development [8]. Conclusion - The risks associated with a potential real estate bubble are significant, and reliance on real estate to stimulate economic growth is becoming increasingly untenable, signaling the end of a prolonged speculative phase in the market [10].

Core Viewpoint - The article discusses the weak performance of CPI and PPI in May 2025, highlighting a deflationary trend and the factors contributing to this situation, including energy and food prices, as well as the broader economic implications for GDP growth and investment opportunities [1][4][11]. CPI Analysis - In May 2025, the CPI year-on-year was -0.1%, unchanged from the previous value, while the PPI year-on-year was -3.3%, lower than the previous -2.7% [1][4]. - The simulated deflation index, based on CPI and PPI weights of 60% and 40%, was -1.38%, the lowest in the past 16 months [1][4]. - The decline in CPI is attributed to a 1.7% month-on-month decrease in energy prices, which negatively impacted CPI by approximately 0.13 percentage points, primarily due to the transmission of commodity price declines influenced by tariffs [6][7]. - Food prices also saw a month-on-month decrease of 0.2%, contributing to a 0.04 percentage point drag on CPI, with weak demand in the restaurant sector being a significant factor [6][7]. PPI Analysis - The PPI decline was exacerbated by two main factors: a decrease in global pricing raw materials and weak domestic construction product pricing [8][9]. - The oil extraction, processing, and chemical industries experienced expanded declines due to falling oil prices, with year-on-year price drops of -17.3% for oil extraction and -14.7% for oil processing [8][9]. - New industry products made a slight positive contribution to PPI, with some sectors like automotive and electronics showing a slight narrowing in their year-on-year decline [8][9]. Future Price Trends - Looking ahead, there is a potential for a slight narrowing of PPI declines in June due to recent rebounds in oil and copper prices, indicating a possible improvement in global pricing factors [10]. - However, to significantly alter the low PPI situation, prices in the construction and emerging industries need to exit the negative growth range, which requires effective local government investment strategies [10]. Economic Outlook - The macroeconomic environment since the "924" policy has shown signs of stabilization, with actual GDP growth expected to remain above 5% in the second quarter of 2025, despite pressures from exports to the U.S. [11]. - The current economic challenges are primarily related to low prices and nominal GDP, leading to high real interest rates and a heavier debt burden, which could affect investment and consumption opportunities [11].