UBS(US:UBS)2025-10-16 01:48Summary of Key Points from the Conference Call Industry Overview - The focus is on China's economic outlook and the upcoming 15th Five-Year Plan (FYP) for 2026-2030, following the 14th FYP's performance and targets. Core Insights and Arguments 1. 14th FYP Performance: Most targets of the 14th FYP are expected to be met by the end of 2025, except for the carbon emission intensity reduction goal, which is likely to be missed due to weaker nominal GDP growth [2][8][10] 2. 15th FYP Implicit GDP Growth Target: The government is anticipated to set a slower implicit GDP growth target of 4.5-5.0% for the 15th FYP, down from 5.0-5.5% in the previous plan [3][12][13] 3. Long-term Economic Goals: China aims to raise GDP per capita to approximately $14,000 by 2025 and double real GDP by 2035, necessitating a nominal GDP growth rate of 6-8% [3][13][14] 4. High-Quality Growth: The new FYP will prioritize high-quality growth driven by innovation, with R&D spending expected to grow at over 7% CAGR, increasing its share of GDP from 2.7% in 2024 to 3.2% by 2030 [4][19][20] 5. Boosting Consumption: The new FYP will emphasize boosting domestic consumption, aiming to increase the share of total consumption in GDP to 58-60% by 2030, up from 56.6% in 2024 [5][24][25] 6. Investment in People: The government plans to invest more in social safety nets and education, promoting people-centric urbanization and increasing fiscal spending on healthcare and social insurances [5][29] 7. Decarbonization Goals: China aims for a 25% share of non-fossil energy in total energy consumption by 2030, up from 20% in 2024, despite challenges in meeting previous carbon intensity reduction targets [6][41][42] 8. Fiscal Reform: The new FYP is expected to accelerate fiscal reforms, including broadening the personal income tax base and addressing local government revenue mismatches [6][42] Additional Important Insights 1. Challenges Ahead: China faces significant challenges, including trade frictions, a property downturn, and aging demographics, which could hinder economic growth [9][10] 2. Opening Up Strategy: The new FYP is likely to further open China's service sector to foreign investment and support Chinese companies in expanding globally [6][36] 3. Anti-Involution Campaign: The government will likely intensify its anti-involution campaign, focusing on creating a unified national market and curbing irresponsible local government investments [30][31] 4. Consumer Confidence: Measures to boost household income and consumer confidence will be critical for achieving the consumption targets set in the new FYP [24][29] This summary encapsulates the key themes and insights from the conference call regarding China's economic strategy and the anticipated direction of the 15th Five-Year Plan.