中国经济-通缩卷土重来-China Economics-Deflation Fights Back

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the China Economics sector, particularly addressing the deflationary trends and economic growth challenges in China as of August 2025 [1][5]. Core Insights and Arguments - Growth Slowdown: There was a sharper-than-expected growth dip in July, with real GDP growth projected to slow to 4.5% YoY in Q3, down from 5.2% YoY in Q2. This slowdown is attributed to a decline in infrastructure capital expenditure by 7.3 percentage points and a drop in durable goods sales due to weather disruptions and a pause in consumption trade-in subsidies [2][3][7]. - Future Projections: While a mild rebound in year-over-year growth is anticipated for August, driven by fading weather disruptions and resumed trade-in subsidies, a further slowdown is expected in September due to the payback of export front-loading and a higher fiscal spending base [3][7]. - Policy Measures: Incremental policy moves are expected to provide a floor for the economy. The Chinese government is implementing a measured anti-involution push and accelerating consumption support, which is seen as a constructive response to the "3D" challenges facing the economy. A supplementary budget of Rmb0.5-1 trillion is anticipated to mitigate the growth slowdown [4][7]. Important Data Points - July Activity Indicators: - Industrial Production (IP) growth was 5.7% in July, down from 6.8% in June. - Manufacturing sector growth decreased to 6.2% from 7.4% in June. - Fixed Asset Investment (FAI) showed a year-to-date growth of 1.6%, with a year-over-year decline of 5.2% in July [6]. - Retail Sales: Nominal retail sales growth was 3.7% in July, down from 4.8% in June, with auto sales declining by 1.5% [6]. Other Noteworthy Content - The report emphasizes the importance of monitoring the property sector, which continues to face challenges, with sales down 7.2% and new starts down 9.1% in July [6]. - The analysis suggests that while the economic outlook remains cautious, the government's proactive measures could help stabilize the market narrative and support growth in the medium term [4][7].