China Musings: Politburo – Policy Preference: Tech Capex over Consumption

研报英文原文证据摘录

China Musings: Politburo – Policy Preference: Tech Capex over Consumption

IdeaM

Continued Musings

3. Consumption takes a back seat: Though the pro-consumption Five-Year Plan sets a

retail sales target of RMB60 trillion by 2030, it stops short of signaling a major near-term

consumption push:

• The new norm: The 2030 retail sales target implies a compound annual growth

rate (CAGR) of merely 3.7%, largely flat vs. average over the past four years,

suggesting that policymakers are accepting a lower, post-pandemic consumption

trajectory.

• A secondary effect: Fundamentally, Beijing views consumption as a by-product of

industrial upgrading and employment growth, not a direct policy lever.

• Administrative easing: Instead of direct fiscal transfers, the path of least

resistance will be administrative tweaks – such as removing auto purchase

controls, optimizing local housing provident funds, and introducing broader school

breaks to spur incremental spending.

4. A persistent two-speed economy: We have trimmed our full-year 2026 GDP growth

forecast 20bps, to 4.6%, to reflect the 2Q miss. However, we expect a modest rebound in

2H, with firmer sequential momentum: YoY GDP growth tracking at 4.5% in 3Q and 4.7%

in 4Q . This would be driven by two supply-side factors: faster infrastructure budget

deployment and normalizing oil prices, with the latter helping ease margin pressures on

domestic refining and petrochemical output.

The result is a deeply entrenched two-speed economy: infrastructure and exports will be the

primary engines, while consumption remains subdued.

5. RMB strength is largely priced in: The recent steady rise in the RMB CFETS index has

sparked debate over whether the PBOC will tolerate more aggressive currency

appreciation to address structural imbalances.