亚太投资者报告：全会后政策与经济展望

Policy and economic outlook post Plenum Five-Year Plan post-Plenum: Tech and Innovation Securing Tech-led Growth Evolution of Industrial Innovation and Upgrades Tech Dominance Animal Spirits Staging a Partial Comeback Emerging sector capex to strengthen,aided by AI adoption… …and policy support A new tech board for the bond marketTo facilitate direct debt financing by tech companies and PEs A state startup fundThe fund could reach Rmb1trn in size after incorporating privateinvestment Expanded quota on PBoC sci-tech relending facilityFrom Rmb500bn to Rmb0.8-1trn Rise in on-budget tech spendingReaching Rmb1.2trn, or 8.3%Y (vs. 4.4%Y for overall fiscalspending) Tech Dominance China’s Competitive Dynamics in AI How competitive are Chinese LLMs? Quality vs. Price Tech Dominance Humanoids: A US$5 Trillion Global Market We expect 1bn cumulative humanoid adoptions globallyby 2050… …with ~30% coming from China Tech Dominance Self-driving: From Horsepower to Brainpower–AI Takes the Wheel Tech and geopolitics–collaboration or competition? Global vehicle sales mix by level of autonomy Our auto sector analyst Tim Hsiao, estimates that the market valueof L2+ smart driving will surpassUS$200bn by 2030andcreateUS$300-400bn in revenue by 2035. Tech Dominance Key Bottlenecks Remain to Be Overcome Tech Dominance Gauging AI Impact on China’s Labor Market Gen-AI to create massive labor-equivalent value, but labordisplacement effect may dominate during transition According to theIMF,about 40% of employment is exposed to AI in emerging markets, with two types of exposure: 1)High-exposure, high-complementarity:Human input difficult to be replaced, but unit labor productivity would be boosted by AI2)High-exposure, low-complementarity:Jobs that could be replaced by AI. Social Welfare Reform Rebalancing through Social Welfare Reform Offers a Promising Pathway Provincial data show rising social welfare spendingIsassociated with higher consumption share in GDP Social Welfare Reform Is Social Welfare Reform Financially Sustainable? Reasonably lifting rural pension benefits would incurmodest additional fiscal burden… Housing Market Housing Deleveraging Yet to Be Backstopped Housing investment has completed the bulk of itsadjustment… …but the outlook for housing prices remains uncertain Housing Market Housing Inventory Digestion: Social Spending Rather than Bailout Reflation(20-25%) Small Steps, Right Direction Disclosure Section Information and opinions in Morgan Stanley Research were prepared or are disseminated by one or more of the following, which accept responsibility for its contents: Morgan Stanley Asia Limited, and/or Morgan Stanley Asia (Singapore) Pte. (Registrationnumber 199206298Z) and/or Morgan Stanley Asia (Singapore) Securities Pte Ltd (Registration number 200008434H), regulated by the Monetary Authority of Singapore (which accepts legal responsibility for its contents and should be contacted with respectto any matters arising from, or in connection with, Morgan Stanley Research), and/or Morgan Stanley Taiwan Limited and/or Morgan Stanley & Co International plc, Seoul Branch, and/or Morgan Stanley Australia Limited (A.B.N. 67 003 734 576, holder ofAustralian financial services license No. 233742), and/or Morgan Stanley Wealth Management Australia Pty Ltd (A.B.N. 19 009 145 555, holder of Australian financial services license No. 240813, and/or Morgan Stanley India Company Private Limited havingCorporate Identification No (CIN) U22990MH1998PTC115305, regulated by the Securities and Exchange Board of India (“SEBI”) and holder of licenses as a Research Analyst (SEBI Registration No. INH000001105), Stock Broker (SEBI Stock Broker RegistrationNo. INZ000244438), Merchant Banker (SEBI Registration No. INM000011203), and depository participant with National Securities Depository Limited (SEBI Registration No. IN-DP-NSDL-567-2021) having registered office at Altimus, Level 39 & 40, PandurangBudhkar Marg, Worli, Mumbai 400018, India; Telephone no. +91-22-61181000; Compliance Officer Details: Mr. Tejarshi Hardas, Tel. No.: +91-22-61181000 or Email: tejarshi.hardas@morganstanley.com; Grievance officer details: Mr. Tejarshi Hardas, Tel. No.:+91-22-61181000 or Email: msic-compliance@morganstanley.com which accepts the responsibility for its contents and should be contacted with respect to any matters arising from, or in connection with, Morgan Stanley Research and their affiliates (collectively,"Morgan Stanley"). Morgan Stanley India Company Private Limited (MSICPL) may use AI tools in providing research services. All recommendations contained herein are made by the duly qualified research analysts;For important disclosures, stock price charts and equity rating histories regarding companies that are the subject of this report, please see the Morgan Stanley Research Disclosure Website at www.morganstanley.com/researchdisclosures, or contact yourinvestment representative or Morgan Stanley Rese