中国经济 人工智能超级周期与国内滞胀

China Economics AlSupercyclevs.DomesticStagflation +852-2501-2754xiangrong.yu@citi.comXinyu JjiAc China'sK-shaped economyappearstobeplayingoutthroughthecontrastproduction and exports,with high-tech IP reaching a five-year high.Butdomestic demand is faltering,as retail sales contracted for the first timesinceCovid and FAldeclinedeepened.SteadyCPland broaderPPI suggeststagflation risks areonthe riseforthedomesticeconomy.Wemaintainourpolicies,we see an acceleration of targeted support for domesticdemandbut not broad-based stimulusahead.Investment-stabilization measuressuch as the"Six Networksinitiative are underway. Consumption andhousehold incomegrowthcould beakeyfocus of July's Politburo meetingBut an outright lift of budget deficit or government bond quota is not our +852-2501-2792xinyu.ji@citi.com SeeAppendixA-1forAnalystCertification,ImportantDisclosuresandResearchAnalystAffiliations. shaped economy,asmixedactivities indicators forMayrevealed. to4.5%YoYinMay,inlinewithourabove-consensus expectations (Citi/Mkt:4.5/4.4%YoY).>50% of thegrowth camefrom high-tech sectors perourestimate,whoseIP expanded at15.1%YoY,afive-yearhigh.Output ofICs,industrial robots,andNEVs all rosefurther,echoing earlierexports data.The Alsupercyclegenerated investment only in selected sectors,with capex intelecommanufacturing growing atdouble-digit and investment in intellectual propertyrising9.3%YoYYtd. indicatorsmissed already subduedexpectations.Retail sales contractedforthefirst time sinceCovidat-0.6%YoY(Citi/Mkt:0.0/-0.2%YoY).Investment declinedeepened to -4.1%YoYYtd (Citi/Mkt:-2.5/-2.3%YoYYtd), with the monthlyrateestimatedbyusat-10.7%YoY,thelowest ratesince25Q4.CompoundedwithsteadyCPland rising PPl,real growthof retail sales and FAl both turned negativeand creatednewlows sinceCovid.TheMiddle East conflictmaynotbefullytoblame:PPlreflation was morethanenergyprices in May,and thesupplyconstraintfromcrudeloosenedwithrecoveringpetrochemicalrelatedoutputs Headlinegrowthcould remainsteadydespitethebifurcatednature.With IPat4.5%YoYand serviceoutput indexup4.4%YoY,monthlyproxyforGDPcouldhover~4.5%YoY,the lower end ofthis year's target.The sharpest slowdown is also likelybehinduswithalowerbase startingtokickinfrom26H2andMiddle East conflictresolution,althoughthereis littlevisibilityforapickupahead.Wemaintainour Weseeanaccelerationoftargeted supportfordomesticdemandbutnotbroad-based stimulusahead.Targeted measures suchas the“SixNetworks"initiativeareunderway,enablingAltransitionand stabilizinginvestment.Consumptionandhouseholdincomegrowthcouldbeakeyfocusofthe JulyPolitburomeeting(heldonthe3Othin2025).Westill thinkjobmarketstressoverthesummercouldpromptmoretargeted efforts.Having saidthat,steady headlineGDPraisesthebarformore significant policyadjustments.An outright lift of the budget deficit orgovernment bond quota is not our base case. Althoughmonetary policy is not inthe driver's seat,westill keep our call fora symbolic10bps cut in26H2E,with risksskewedto earlier. ReadthroughMonthlyIndicators MonthlyindicatorscameinmixedforMay.The supplyside continuedto outpacethedemandside,withAl supercycleanddomesticstagflation nowtwodominantforces intheK-shapedeconomy. Industrialproductionreboundedto4.5%YoY,in linewithourabove-consensusforecast(Citi/Mkt:4.5/4.4%YoY).TheAlsupercycleappearstohavehelped. Alsupercyclepowersahead.High-techIProse15.1%YoY,upfrompreviously12.8%YoY and hitting a five-year high.With its share at ~17% in IP(NBS, Oct20th,2025),itcould havecontributed>50%ofIP.Outputofhigh-techproductsrosefurther, withICs at 22.9%YoY (vs.22.1%YoYinApril),industrial robots at27.9%YoY (vs.15.1%YoY),and NEVsat17.8%YoY (vs.3.8%YoY).Exports deliveryremained steadyat10.1%YoY. ImpactfromMiddleEastconflictfaded.Outputofethylenerecoveredto2.1%YoY (vs.-4.1%YoY)and contraction narrowed forsulfuricacidto-1.6%YoY (-2.2%YoY).The resolution to theMiddle East conflict could help further. Oldeconomyshowednosignofstabilization.Crudesteeloutputcontinuedtocontract-2.7%YoY (vs.-2.8%YoY),while cementoutputdropped-8.1%YoY(-10.8%YoY).TheSixNetworksinvestmentcouldhavejuststartedandmaytakelongertoshoreupactualinvestmentandproduction. Retailsalesrecorded thefirstnegativereadingsinceCovid.TheMayreadingcameinat-0.6%YoY,belowalreadysubduedexpectations(Citi/Mkt:0.0/-0.2%YoY, Prior:0.2%YoY).Steady CPlat1.2%YoYin May could have sent realgrowth to ~1.8%YoY. Trade-insubsidiesremainedadrag.Weestimatethedragat-2.2pptsinMayvs.-2.Oppts in April, amarginal deterioration insufficientto address the furtherdecline,inourview.Auto sales stayed soft at-16.1%YoY (vs.-15.3%YoY),whilehomeappliancesremainedsluggishat-15.6%YoY(vs.-15.1%YoY.Telecomequipmentsalesslowedfurtherto0.7%YoY(vs.6.2%YoY),whichcouldbeundera"doublewhammy"fromreducedsubsidiesandpriceincreases.Thehigh-base contraction could follow in 26H2. bothnarrowingfrompreviousreadingsthroughremainingnegative.Struggleofbigretailers (annual sales>RMB5mn)continued, with their monthlysales at -5.2%YoY (vs.-4.9%YoY). Shr