China is showing a two-speed pattern in the AI and energy super cycle. Short-term policies will not change drastically, but long-term reforms are expected (Morgan Stanley)
A Morgan Stanley report pointed out that China has shown a two-speed pattern of strong exports and weak domestic demand in the economic AI and energy super cycle.
A Morgan Stanley report pointed out that China has shown a two-speed pattern of strong exports and weak domestic demand in the economic AI and energy super cycle. The Asian industrial cycle has boosted China's export share and is expected to reach 16.5% by 2030, but the industrial spillover effects have weakened. The policy will maintain a supply focus, and there will be no major reversal similar to September 2024 in the near future. The USD/CNY is expected to reach 6.75 by the end of the year. The market's expectations for policy stimulus are sometimes high, but the report believes that there will be no major turn in the short term, and the focus is on long-term reforms. The meaning of the potential transaction is that it is highlights to unlock residents' savings and narrow the imbalance between supply and demand through social security, fiscal and cadre assessment reforms. In the long run, the spread of AI will boost GDP, but employment protection needs to be balanced. One sentence conclusion: China is in a structural two-speed growth period of "strong external demand and weak domestic demand". In the short term, policies will not shift to stimulating consumption on a large scale. The long-term growth momentum comes from reforms and investments in the AI and energy fields. Positive/negative: Positive for export-oriented and AI and energy-related industries; negative for domestic consumption industries. The current market expectations for strong policy stimulus may be too high, ignoring the structural problems of weak domestic demand, while optimism about exports and the AI industry chain may be more reasonable. Catalysts: 1) China's export and PMI data; 2) whether there are new pro-consumption policies; 3) RMB exchange rate trends; 4) investment and reform progress in AI and energy-related fields.