Summary of the Conference Call on China's AI Development Industry Overview - The report focuses on the **Artificial Intelligence (AI)** industry in **China** and its economic implications. Key Points and Arguments 1. **Economic Impact of AI**: In 2023, it was estimated that AI could raise labor productivity and potential GDP in China by **9%**, which has been revised down to **8%** due to the large share of workers in less-exposed, physically intensive occupations [5][23][10]. 2. **Generative AI's Role**: The main economic impact from Generative AI is expected to come from task automation, driving labor cost savings and productivity increases. However, the overall uplift in China will be smaller compared to more developed economies like the US [5][10]. 3. **Faster Adoption Timeline**: Recent developments, including the emergence of **DeepSeek** as a global competitor, suggest that AI adoption in China will occur faster than previously anticipated. AI is expected to start raising potential growth in China by **2026**, providing a **0.2-0.3 percentage point** uplift to annual GDP growth by **2030** [4][10][19]. 4. **AI-Related Spending**: AI-related spending in China is projected to rise sharply in **2025-2027**, potentially boosting GDP by almost **1%** by the end of the decade. This increase reflects initial tech company capital expenditures transitioning to spending on end-user AI services by non-tech companies [10][29][31]. 5. **Labor Market Challenges**: The adoption of AI poses challenges for the Chinese labor market, particularly for low-skilled service occupations. The youth unemployment rate remains above **15%**, and job losses in sectors like real estate and finance have been reported [33][35]. 6. **Demographic Trends**: China's aging population may necessitate increased reliance on AI and robotics to maintain productivity levels. The working-age population is projected to contract by **25%** over the next **25 years** [35][33]. 7. **Investment Cycle**: The race for AI development is expected to boost tech sector employment in the near term, while the non-tech sector may experience minimal job displacement initially. However, significant displacement may occur as AI becomes ready for mass adoption [35][37]. 8. **Future Uncertainty**: The future path of AI development and its impact on job displacement remains uncertain. Despite the rapid advancements, the real GDP growth forecast for China has not been changed due to the unpredictability of AI adoption [37][33]. Additional Important Content - **Foundation Models**: The number of foundation models in China rose to **20** in **2023**, surpassing the combined total of the EU and UK, indicating a significant advancement in AI research [10][11]. - **Investment in AI Infrastructure**: Major Chinese tech companies, including Bytedance, Baidu, Alibaba, and Tencent, are expected to increase their capital expenditures by **38%** in **2025** to enhance AI capabilities [29][30]. - **AI Adoption Rates**: The updated model suggests that AI adoption rates in China could exceed **30%** by **2030**, with marginal adoption peaking in the early **2030s** [19][22]. This summary encapsulates the critical insights from the conference call regarding the current state and future outlook of AI in China, highlighting both opportunities and challenges within the industry.

更多资料加入知识星球：水木调研纪要 关注公众号：水木纪要 February 16, 2025 06:09 PM GMT M Update Geely Automobile Holdings | Asia Pacific One-off gain from ZEEKR-Lynk integration Geely recorded a Rmb6.47bn gain following completion of the Lynk & Co integration by ZEEKR Tech Group, per a company announcement. Although this is a non-cash one-off, it should help mitigate the YoY base effect when comparing to the group's 2024 earnings, which were boosted by a handsome one-off gain (~Rmb7.5bn). Following the integration, we should see syne ...

更多资料加入知识星球：水木调研纪要 关注公众号：水木纪要 February 16, 2025 05:41 PM GMT China Materials | Asia Pacific Demand Tracker – February 14 Per 100NJZ, the work resumption rate of sampled construction projects was 23.5% in the 2nd week after holiday, remaining lower YoY. Production/sales of industrial goods: According to CISA, daily crude steel output of major steel producers in early-Feb was 2.133mnt, +1.1% vs. late-Jan, and +5.9% YoY. Per Sxcoal, coal supply is resuming faster than demand after Chinese New Year, with the the ...

更多资料加入知识星球：水木调研纪要 关注公众号：水木纪要 J P M O R G A N Asia Pacific Equity Research 17 February 2025 Autos/ Auto Parts Sectors Reports on tariff imposition on automobiles: Presenting scenario analysis again and monitoring risk of retaliatory tariffs On February 14, various media, including the Nikkei, reported that the Trump administration is expected to impose tariffs on automobiles. The possibility of tariffs being implemented around April 2 was suggested, but much remains uncertain, including the actual timing and ...

更多资料加入知识星球：水木调研纪要 关注公众号：水木纪要 16 February 2025 | 6:59PM HKT EHang (EH): Operator Certificate to accelerate eVTOL commercialization; Expanding footprint in China; Buy Earnings revision: We revised up EHang earnings by 1%/ 6%/ 9% in 2025-27E mainly on higher revenues of EH216-S, supported by accelerated EH216-S deliveries on clients' expanding commercial applications of eVTOL post obtaining OC. Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors sh ...

更多资料加入知识星球：水木调研纪要 关注公众号：水木纪要 Japan Portfolio Strategy Tariffs headwind vs. 3Q results tailwind: Continue to expect earnings growth to lift Japan stocks Japanese equities have rebounded after navigating the January BOJ rate hike without incident. However, headwinds for global equities, including Japan, have re-strengthened since early February, after President Trump signed executive orders to impose tariffs on imports from Canada, Mexico, and China, raising concerns about a potential trade war. We believe ea ...

更多资料加入知识星球：水木调研纪要 关注公众号：水木纪要 14 February 2025 | 2:24PM EST Apple Inc. (AAPL): December 2024 China phone data shows m/m acceleration BOTTOM LINE: December 2024 China foreign branded phone shipments - which we view as a proxy for Apple iPhone shipments in China - increased 1% yoy, marking the best monthly year-over-year growth since July 2024 (+3% yoy) and a sharp improvement from -47% yoy in the prior month (November 2024). That said, foreign branded phone shipments continued to lag the overall market with C ...

更多资料加入知识星球：水木调研纪要 关注公众号：水木纪要 February 16, 2025 10:00 PM GMT Asia | Asia Pacific Three Actionable Ideas Silergy – OW | GDS – OW | Suncorp – OW Source: Morgan Stanley Research, DataStream Refinitiv, Bloomberg. Performance data as at Feb 11, 2025. Cumulative outperformance: against local benchmarks. Holding period total return measures performance when idea was effective. **Avg. 12M total return measures performance of all ideas (closed and active) from Feb 11, 2024, to Feb 11, 2025, and does not adjust for bu ...

更多资料加入知识星球：水木调研纪要 关注公众号：水木纪要 14 February 2025 | 11:15AM EST Americas Retail: Retail sales decline in January; December restated higher Of the 15 categories, 8 accelerated on a year over year basis compared to last month, including DIY, Food & Beverage, Food Services, General Merchandise, Department Stores, Gas Stations, Miscellaneous, and Health & Personal. On a two-year stack, of the 15 categories, 2 accelerated on a year over year basis compared to last month, including Food & Beverage and Gas Stations. O ...

更多资料加入知识星球：水木调研纪要 关注公众号：水木纪要 Global Markets Strategy 16 Feb 2025 This material is neither intended to be distributed to Mainland China investors nor to provide securities investment consultancy services within the territory of Mainland China. This material or any portion hereof may not be reprinted, sold or redistributed without the written consent of J.P. Morgan. China/HK Equity Strategy Dashboard Wendy Liu AC (852) 2800 1087 wendy.m.liu@jpmorgan.com J.P. Morgan Securities (Asia Pacific) Limited/J.P. Morga ...