中国经济：国内需求走弱，增量支持正在推进-China Economics_ Incremental Support Underway as Domestic Demand Weakens

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the Chinese economy, highlighting a weakening in domestic economic activities as of July 2025, with a widening supply-demand imbalance [3][4]. Core Insights and Arguments - Growth Momentum: Economic growth momentum softened in July, with industrial and services production growing at 5.7% to 5.8% YoY. However, retail sales slowed to 3.7% YoY, marking the lowest rate of the year, and investment growth turned negative at -5.2% YoY, the lowest since COVID-19 [3][10][17]. - Demand Weakness: The demand indicators deteriorated sharply, particularly in the goods sector, with retail sales and investment showing significant declines. The property sector also weakened further [3][10][11]. - Weather Impact: Adverse weather events, including typhoons and heavy rains, negatively impacted infrastructure investment, despite ongoing mega-projects [4][10]. - Policy Response: Policymakers are expected to implement incremental support measures, focusing on property and investment, including a potential 10bps rate cut, 50bps RRR cut, and a RMB500 billion quasi-fiscal injection in the second half of 2025 [5][6]. Additional Important Content - Investment Plans: Major investment projects include a RMB1.2 trillion mega-dam project in Tibet and a railway connecting Xinjiang and Tibet, with expected investments exceeding RMB300 billion over five years [6]. - Consumption Support: New policies such as childcare subsidies (estimated at RMB117 billion) and interest rate subsidies for consumption loans are anticipated to support consumer spending [6]. - Sector Performance: - Retail Sales: Durables goods sales were supported by trade-in policies, but overall retail sales growth decelerated. Telecom equipment sales rose 14.9% YoY, while auto sales contracted by -1.5% YoY [18][20]. - Fixed Asset Investment (FAI): FAI fell to 1.6% YoY YTD, with negative growth across property, capex, and infrastructure investments [10][12]. - Property Sector: Property investment fell 17.2% YoY in July, indicating ongoing weakness in the sector [11]. - Austerity Measures: The ongoing austerity policy continues to suppress consumption, particularly in the restaurant and beverage sectors, with restaurant revenue growing only 1.1% YoY [20][28]. This summary encapsulates the critical insights from the conference call, providing a comprehensive overview of the current state of the Chinese economy and the anticipated policy responses.