中国宏观：未来五年的五大主题

Five Themes for theNext Five Years Yi Xiong, PhDChief Economist+852 2203 6139 Deyun OuEconomist+852 2203 6139 Five themes for China in the next Five Years Paul Krugman, 2025 Adam Posen, 2023 -Chinese risk assets performed strongly this year, but not longago,“Japanification”wasconsidered a majorrisk for China. What factors aredriving this change in sentiment? -While short-term factors helped, a more significant influence may stem fromevolving long-term perceptions of China. This report highlights five key long-term themes for the country's future: 1.Productivity: China takes lead in industrial innovation2.Supply-side reform: “Anti-Involution” to restore profitability3.Domestic demand: Boosting consumption through services sector4.External demand: Chinese firms “GoingOverseas”5.Currency: Rise of the Renminbi Theme 1:Productivity China Takes Lead inIndustrial Innovation Shifting Academic Focus: STEM Growth in Top ChineseUniversities LawEconomicsMgmt.Bottom 3 (decreasein admissions) Building Talent Pool: China's Growing Competitive Edge China leads the world in the supply ofengineers Almost half of AI top talents graduatedfrom Chinese universities Catching Up with Chinese Characteristics:the Case of the Smartphone Industry Core elements to China’s success: (1) a generational product upgrade, (2)open ecosystem with many competitors, (3) co-location of manymanufacturers and suppliers, and (4) rapidly adapting to market demand Android OS accelerated smartphone salesglobally… …with Chinese phone makers winning large marketshares Investment Surge: The 'DeepSeek Moment’and Return of Animal Spirits Embodied AI: China’s Next Frontier in AI revolution •Embodied AI–AI that interacts with and learns from physical world–iswidely considered a central future direction of AI development •Embodied AI is not a distant speculation but an ongoing evolution.Chinese is rapidly advancing in the supply chains for products such asIntelligent Cars and Humanoid Robots Theme 2:Supply-side reforms “Anti-Involution” toRestore Profitability The Auto Sector's Dilemma:Profitability Erosion Amidst EV Growth Car sale prices and auto sector profit margin Policy Solutions: Market Consolidation forProfitability Restoration Sequencing of Recovery: from Producer Prices toCapacity Utilization Theme 3:Domestic Demand Boosting Consumption ThroughService Sector Expansion Household savings rateremains elevated. How tounlock the potentials of Chinese consumers? Chinese consumers’spendingon services issignificantly lower than peers Services consumption tends to increase in share asincome level rises Per-capita income and servicesconsumption Which services sectors have high growth potential?Healthcare, Recreation, and Public Services Demographic Dividend: The 'Silver Economy' DrivingService Demand Theme 4: “Going Overseas” Chinese Firms’Global Expansion Overseas revenue share increased among Chinese firmsdespite a drop in exports as a share in GDP. Why? The explanation is “Going Overseas”: China increasinglyexports to EMs, which likely requires increased localcontent and local presence China’s exports by destination 180China'sexports by destination, USD bn One indicator is the surge in China’s outward directinvestment (ODI) in recent years China Outward Direct Investment Nevertheless, China’sinvestment abroad remained lowrelative to its share inexports, and has scope toincrease further %, share in world direct investment As “Going Overseas” gains momentum, many Chinesebrands saw an increase in global market share Change in market share ofChinesebrandsby products Theme 5: Currency Rise of the Renminbi RMB exchange rate and interest rates declined in thepast 5 years. Are we reaching an inflection point? Interest rate could rise in the next 5 yearsif inflation normalizes Depreciations are rare in RMB’s history.Competitiveness gains drive its long-tern appreciation RMB Internationalization has quietly accelerated: RMBshare in payment rose sharply TheRise of the InternationalRMB Financial Markets Appendix 1Important Disclosures*Other information available upon request *PricesarecurrentasoftheendoftheprevioustradingsessionunlessotherwiseindicatedandaresourcedfromlocalexchangesviaReuters,Bloombergandothervendors.OtherinformationissourcedfromDeutscheBank,subjectcompanies,andothersources.ForfurtherinformationregardingdisclosuresrelevanttoDeutscheBankResearch,pleasevisitourglobaldisclosurelook-uppageonourwebsiteathttps://research.db.com/Research/Disclosures/FICCDisclosures.Asidefromwithinthisreport,importantriskandconflictdisclosurescanalsobefoundathttps://research.db.com/Research/Disclosures/Disclaimer.Investorsarestronglyencouragedtoreviewthisinformationbeforeinvesting. Analyst CertificationTheviewsexpressedinthisreportaccuratelyreflectthepersonalviewsoftheundersignedleadanalyst(s).Inaddition,theundersignedlead analyst(s)hasnotandwillnotreceiveanycompensationforprovidingaspecificrecommendationorviewinthisr