投资者演示文稿-中国-下半年增长放缓，投资组合再平衡难度加大Investor Presentation-Slower 2H, Harder Rebalancing

Summary of Key Points from the Conference Call Industry Overview - Industry: Asia Pacific Economic Outlook, focusing on China - Key Focus: Economic growth, deflation, trade dynamics, fiscal policy, and social welfare reforms Core Insights and Arguments 1. Economic Growth Projections: Real GDP growth in China is expected to reach 4.8% in 2025, with pressures anticipated in the second half of the year due to persistent deflation [3][4][5] 2. Deflation Trends: A deflation feedback loop is ongoing, impacting nominal GDP and wage growth, with nominal GDP growth projected to remain subdued [19][20] 3. Export Weakness: Exports are predicted to weaken in the second half of the year due to front-loading effects and a decline in global trade, compounded by the reintroduction of tariffs [7][10] 4. Fiscal Stimulus Decline: A reduction in fiscal stimulus is expected in the second half of 2025 compared to the first half, with additional stimulus projected to be modest at RMB 0.5-1 trillion [12][15][16] 5. Housing Market Challenges: The housing market continues to face downturns, with declining secondary home sales and transaction prices [23][24] 6. Social Welfare Reforms: Emphasis on the need for social welfare reforms to support consumption and address the fragmented welfare system, which is particularly weak for rural residents and migrant workers [59][66][70] 7. Reflation Strategy: A "5R" reflation strategy is proposed, focusing on fiscal measures, monetary easing, and social welfare improvements to stimulate consumption and economic rebalancing [57][58] Additional Important Insights 1. Tariff Dynamics: Current US tariffs on China are expected to remain around 40%, with potential escalations still possible [75][76][80] 2. Investment Restrictions: Ongoing US investment restrictions in strategic sectors pose a concern for future economic interactions between the US and China [100][101] 3. RMB Outlook: The RMB is expected to experience mild appreciation against the USD, with a forecast of 7.15 by the end of 2025 [103][105] 4. AI and Technological Advancements: China is positioned to leverage its large talent pool and technological capabilities to drive future industrial upgrades, particularly in AI and automation [139][168] 5. Demographic Challenges: The need for policies to address declining birth rates and support for families is highlighted, with new birth subsidies introduced [69][70] This summary encapsulates the critical points discussed in the conference call, providing a comprehensive overview of the economic landscape and strategic considerations for the Asia Pacific region, particularly China.