中国经济：北京的新年部署-Investor Presentation-China Economics Beijing's New Year Resolution

Summary of Key Points from the Conference Call Industry Overview - Industry: Chinese Economy and Policy Outlook - Company: Morgan Stanley Asia Limited Core Insights and Arguments - GDP Target: The GDP growth target is expected to remain around 5%, which has been largely confirmed by the Central Economic Work Conference (CEWC) [3] - Fiscal Policy: Initial fiscal package is flat, with a potential mid-year top-up of 0.5% of GDP confirmed [3] - Monetary Policy: Anticipated interest rate cuts of 10-20 basis points and reserve requirement ratio (RRR) cuts of 25-50 basis points, but with a dovish tone indicating limited room for further cuts [3] - Infrastructure Investment: A front-loaded infrastructure push is confirmed for Q1, focusing on urban renewal, AI+, and green transition [3] - Housing Policy: Vague language around housing guardrails, with potential for inventory buybacks and adjustments to provident-fund financing to support mortgage interest subsidies [3] - Service Consumption: Selective tweaks in service consumption are expected in the second half of 2026, but specifics are pending [3] - Anti-involution Strategy: A gradual, market-oriented approach is being adopted, though execution challenges remain [3] Trade-in Scheme Updates - Equipment Upgrade: Coverage expanded to include elevator installations, elderly care institutions, and fire rescue facilities, with less subsidy per vehicle on average [4] - Consumer Goods Trade-in: Coverage narrowed from 12 categories in 2025 to 6 in 2026, with reduced subsidies for home appliances and consumer electronics [4] Currency Insights - USDCNY Strength: The recent strengthening of the USDCNY is attributed to a weaker dollar, while the RMB basket remains stable [5][6] - Seasonal Trends: USDCNY typically strengthens at year-end due to foreign exchange conversions by exporters [11] Inflation and Economic Indicators - CPI Trends: Weak underlying demand indicated by food CPI; a more sustained increase in core CPI may not occur until 2H26-2027 [16] - GDP Deflator: Expected to remain negative with nominal growth likely staying below 4% in 2026, with a potential mild positive shift from 2027 due to welfare upgrades [18] - PMI Insights: December PMI strength attributed to quarter-end production pushes, robust exports, and infrastructure pass-through [20] Additional Important Points - PPI Expectations: Month-over-month PPI is likely to soften in December, although year-over-year may rebound from a favorable base [22] - Market Sentiment: The overall economic sentiment reflects cautious optimism, with a focus on gradual policy adjustments and infrastructure investments to stimulate growth [3][20]