Group 1: Dollar's Dominance - The dollar's strength is attributed to its role in global trade settlements, with 41% of cross-border payments made in dollars, compared to 32% in euros and only 3% in yuan [1] - The dollar is the absolute leader in global financial markets, with U.S. investment banks and funds primarily operating in dollar assets, leading to capital flows towards the U.S. during interest rate hikes [4] - The dollar's status as the world's primary reserve currency is evident, with 58% of global foreign exchange reserves held in dollars, compared to 19% in euros and 5% in both yen and yuan [6] Group 2: U.S. Economic Strategies - The U.S. employs monetary policy as a weapon, with interest rate adjustments causing global economic tremors, as seen in the 1980s and the 1997 Asian financial crisis [7] - The U.S. financial market's maturity allows it to attract global capital, even during crises, as demonstrated during the 2008 financial crisis when the U.S. absorbed global funds to stabilize its economy [10] - Trade rules enforced through international institutions like WTO and IMF compel countries to use the dollar for transactions, with sanctions imposed on non-compliant nations [11] Group 3: Challenges from China - China's rise has complicated U.S. dollar-centric strategies, with China maintaining control over its currency and foreign exchange policies, limiting U.S. influence [11][12] - China has diversified its trade partnerships, with trade volumes reaching $690 billion with the U.S. and over $900 billion with ASEAN in 2023, while increasing the yuan's share in cross-border payments to 4.5% [13] - China's military advancements and strategic positioning in the South China Sea challenge U.S. military dominance, with significant naval capabilities developed in recent years [14][18] Group 4: U.S.-China Relations - The U.S. has recognized its economic dependence on China, particularly highlighted during the global supply chain crisis, leading to a shift towards cooperation rather than confrontation [18] - The U.S. inflation rate surged to 8% during the trade war, prompting a reconsideration of its approach towards China, as indicated by Treasury Secretary Yellen's visit to China in 2023 [18]

Investment Rating - The report maintains a "Recommended" rating for the communication industry [2] Core Viewpoints - The global artificial intelligence market continues to grow, with China's intelligent computing development rate exceeding expectations. IDC forecasts that by 2025, China's intelligent computing scale will reach 1,037.3 EFLOPS, with a compound annual growth rate of 46.2% from 2023 to 2028 [31][36] - The report emphasizes the importance of the upcoming Two Sessions meetings in March 2025, which may influence policy directions and market sentiment [11] - The communication sector is expected to benefit from the digital economy's new infrastructure, with a focus on AI applications and the recovery of the optical network industry chain [4][24] Summary by Sections 1. Weekly Market Performance - The communication sector index fell by 9.64% in the past week, while the switch manufacturing sub-sector performed well with a gain of 10.04% [8][19] - Among individual stocks, 10.69% increased, 1.53% remained stable, and 87.78% declined [22] 2. Industry Development and Key Events - The report highlights the rapid growth of the industrial internet, 5G applications, and the integration of AI in various sectors, indicating a promising outlook for the communication industry [11][24] - China Mobile has successfully completed the full-stack domestic deployment of DeepSeek V3/R1 for China Petroleum, enhancing AI technology applications in the energy sector [9] 3. Major Equipment Manufacturers' Dynamics - ZTE Corporation reported a revenue of 121.3 billion yuan and a net profit of 8.42 billion yuan for 2024, maintaining stable performance despite a decline in telecom capital expenditure [10][49] - Huawei announced the launch of the Star River communication system, marking a significant breakthrough in satellite communication technology [10][49] 4. Investment Recommendations - The report suggests focusing on high-quality stocks in sub-sectors with improving market conditions, particularly in digital infrastructure and AI applications [4][24]