中国宏观追踪：扩大合作与促进消费

EconomicsChina Broadeningcooperationand boostingconsumption ◆Trade uncertainties promptChina to broaden cooperation withother partners,such as EuropeandSE Asia Erin XinEconomist, Greater ChinaThe Hongkong and Shanghai Banking Corporation Limitederin.y.xin@hsbc.com.hk+852 2996 6975 ◆China's industrial profits continuedto recover, driven byequipment manufacturing and high-tech manufacturing Lulu Jiang (Reg. No. S1700523070001)Economist, Greater ChinaHSBC Qianhai Securities Limitedlulu.l.l.jiang@hsbcqh.com.cn+86 755 8898 3404 ◆Shortened work-weeks are being piloted, whileShanghairolled outanewaction plan to bolster consumption Jing LiuChief Economist, Greater ChinaThe Hongkong and Shanghai Banking Corporation Limitedjing.econ.liu@hsbc.com.hk+852 3941 0063 Trade:Lookingto broaden cooperationwith Europe andASEAN US trade policy uncertainty continues to affect trade flows and investment decisions.Amid the US announcement of reciprocal tariffs, China’s overall cell phone exportsdropped 21% y-o-y in April, among which, smartphone shipments to the US declinedby 70%y-o-y (based on HS code 851713), despite the reciprocaltariff exemptions forsome consumer electronics (though they were only announced mid-April). Heidi LiAssociateGuangzhou iPhones are primarily produced and assembled in China, but reportedly Apple islooking to shiftproduction of its US iPhones to India by end-2026 (FT, 24 April;Reuters, 25 April) to diversity and mitigate US tariff impact. However, on 24 May,President Trump commented on social media that Applewouldneed to pay at least25%tariffsunless all iPhones sold in the US are manufactured domestically.Therising tariff uncertainty may further delay corporate investment plans. That aside,Chinese and US officials continue to have discussions.On22May, ViceForeign Minister,Ma Zhaoxu,had a phone call with US Deputy Secretary of State,ChristopherLandau, exchanging views on China-US relations and important issuesof common concern, and agreed to continue communications(Ministry of ForeignAffairs, 22 May). Meanwhile, China is seeking tobroaden cooperationwithother tradepartners.Before traveling to Malaysia to attend the ASEAN-GCC-China Summit, ChinaPremier LiQiangpaid athree-day visit to Indonesia (Xinhua, 25 May). During thistrip, China and Indonesia signed a renewed MoU, extending the bilateral localcurrency settlements cooperation from current account and direct investment to alltransactions, including capital and financial accounts (pbc.gov.cn, 25 May). This willgreatly enhance both country’spayment connectivity and foster wider usage of RMBin the region. Meanwhile,the heads of trade for China and the EU plan to meet in early June asboth attend the WTO ministerial meetings (Bloomberg, 26 May). China and the EUwill celebrate 50 years of relations later this summer. The recent warming up ofChina-EU relations bodes well for improved trade and investment engagement.China has also noted that it will increase imports from central and eastern Europeancountries and boost projects under the Belt and Road Initiative (Xinhua, 22 May). HSBC Global Research Podcasts Listen to our insights Find out more Issuer of report:The Hongkong andShanghaiBanking Corporation Limited Disclosures & DisclaimerThis report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it. View HSBC Global Research at:https://www.research.hsbc.com Industry:China’s industrial profit continuedon agradualrecoverytrend According to NBS, China’s industrial profits increased by 1.4% y-o-y in the Jan-Apr period, up0.6ppt from Q1. Among all 41 major industrial sectors, about 60% saw y-o-y profit growth. In Aprilalone, industrial profit rose 3.0% y-o-y, compared to 2.6% inMarch. These are encouraging results,and may be reflective ofthe upside surprisefromthe latestindustrial production and trade numbers (China activity, 19 May). Thissuggeststhat China is stillcapableof avertinga significant slowdown amid the US tariff hikeinApril. Byindustrial sector, equipmentmanufacturing and high-tech manufacturing were the drivingforcesbehind the overall profit recovery, growing by 11.2% and 9.0% in Jan-Apr,respectively, up4.8ppt and 5.5ppt from Q1. Large-scale equipment upgradesmay havealso playeda role, whilethe expansion oftheconsumer goods trade-in programs also had significantimpact on profits onvarious household electrical appliances.NBS noted that profits in home electrical appliances,home kitchen appliances and non-electrichome appliances were up by 15-17% in Jan-Apr.Nonetheless, insufficient demand and falling prices still exist. In Jan-Apr, industrial profits inautomanufacturing declined 5% y-o-y, on top ofthe8% profit decline in 2024, suggesting downwardprice pressure remainson the back of heightened competition. On23May, China’s largest EVproducer BYD slashed prices on22 smartEVmodels by 10-34% (Yicai, 26May). Consumption:Shortened work-week pilot