Economics | 15 November 2022 Analyst certifications and other disclosures on last page. This research report has been created by CCB International Securities Ltd. 1 10月份的经济数据走弱。尽管线上销售有所帮助，但零售数据总体疲软凸显了疫情防控政策的影响。环保措施的收紧则对能源密集行业的生产有所抑制，但高科技产业增速依然强劲。我们预计受疫情等因素影响，未来数月增长将继续承压，但经济表现预计好于第二季度的低谷。 疫情防控政策调整对经济的利好仍有待时日。最近宣布的疫情防控的优化措施将为消费提供一些支持，但由于动态清零政策的总体目标保持不变，我们预计短期内整体效果仍然有限。但政策调整为明年疫情防控政策进一步放宽奠定基础，有利经济的显著改善。 预计宏观政策继续保持支持态势。政府对房地产行业的支持立场预计持续，有利于降低地产行业的金融风险。短期央行的流动性政策预计保持稳定宽松，公共投资有望保持稳健增长，特别是能源转型等行业，对短期经济增长有所支持。 Oct economics data missed expectations across the board, reflecting Covid restrictions and the soft property sector. Disappointing retail sales highlighted the impact of Covid restrictions, despite some offset from online sales. The tightening of environmental restrictions also curbed production of the energy intensive sectors, but high-tech output growth remains strong. We expect the headwinds to growth to continue in the coming months though the economy is likely to be better than it was in the trough in 2Q. Boost to economic growth from Covid policy relaxation will take time to materialize. Although recently announced measures on fine-tuning Covid controls will lend some support to consumption, we expect the overall effect to be marginal in the near-term as the broad goal of the Dynamic zero-Covid policy remains unchanged. More relaxation could come next year, however, paving the way for significant improvement. Macro policies to remain supportive. The government’s supportive stance towards the property sector is likely to continue, reducing financial risks in the sector amid economic headwinds. Liquidity policy is likely to stay accommodative and public investment to remain solid led by priority areas such as the energy transition. Kevin Xie (852) 3911 8241 kevinxie@ccbintl.com Li Cui (852) 3911 8274 cuili@ccbintl.com CCBI SECURITIES | RESEARCH China Economics Update: Soft Oct eco data points to continued policy support 中国经济评论: 10月数据走弱，料政策持续维稳 Economics | 18 November 2022 CCBI SECURITIES 2 Softer-than-expected industrial production and retail sales Industrial production (IP) growth slowed more than expected in Oct (actual: 5%YoY versus consensus: 5.3%YoY). Sequential growth slowed from 0.8% MoM in Sep to 0.3% MoM, slower than historical averages. The slowdown was evident in most sectors except pharmaceuticals and electric machinery (Fig 1).  Growth in mining output moderated to 4%YoY in Oct, the slowest pace since Sep 2021. Growth in electricity and utility production output rebounded slightly to 4%YoY, as high base effects in Sep to Oct 2021 caused by electricity shortages, had gradually faded.  Growth in manufacturing production decelerated from 6.4% YoY in Sep to 5.2% in Oct. Despite a broad slowdown, high tech manufacturing, such as electric machinery and computer & electronic equipment, continued to outstrip overall manufacturing, with output growth accelerating to 10.6%YoY, the fastest pace since Mar 2022. Auto manufacturing output growth eased to a still-solid 18.7% YoY in Oct. We expect the boost in production from the recovery in auto supply chains this year to fade in the months ahead. Retail sales in Oct were weaker than the consensus forecast because of the imposition of Covid restrictions in a growing number of Chinese cities (Fig 2). Total Covid cases have risen since the start of the National Day Holidays (1 Oct). Local authorities responded with rigid pandemic control measures including restrictions on mobility that weighed on consumer spending. Retail sales contracted 0.7% MoM or 0.5% YoY in Oct. Catering services bore the brunt of Covid restrictions, contracting 8.1% YoY, though spending in consumer goods was affected too. Online shopping growth jumped 22%YoY in Oct, offsetting some of the weakness in offline activities. Fixed Asset Investment (FAI) growth slowed to 5% YoY in Oct by our estimate (Fig 3), with falling real estate investment the main drag. By category:  Despite some softening, broad infrastructure investment continued to grow at double-digits in Oct, reflecting investment for energy transition and other prioritized areas. Investment growth in traditional infrastructure such as transportation, water conservancy and postal services, stepped down slightly to 9.4% YoY. Investment growth in broad infrastructure investment, including investment in the utilities sector, remains at a solid 12.6%YoY, pointing to accelerated investment to facilitate the energy transition.  Manufacturing FAI growth dipped to 6.9% YoY in Oct. However, according to the NBS, high-tech investment continued to expand strongly at 20.5% YoY in Oct over the past ten months. The strong push into high tech sectors will remain the medium-term investment theme given industrial upgrades and growing US technology restrictions. This is consistent with our vie