研究报告全文：21Feb2023CMBInternationalGlobalMarketsEquityResearchEconomicsPerspectiveChinaMacroMonitorAnonlinearrecoveryChinaeconomyhasbeenintheresumptioncyclethankstoeconomicreopeningBingnanYEPhDcreditpolicylooseningandpro-businesspolicyshiftLocalgovernmentsand85237618967SOEshaveallstrivedforagoodstartthisyearasthetopleaderhasattachedyebingnancmbicomhkmoreimportancetotheeconomicgrowthInner-citymobilityhasrecoveredKevinZhangsupportingarapidrecoveryinsomeserviceconsumptionHousingsalesdurable85253364682consumptionandbusinesscapexshouldgraduallyreboundwithsomekevinzhangcmbicomhkfluctuationsintheirrecoverypaceinfutureThereflationpressureshouldbemoderateasChinasinflationmayretreatin1H23beforereboundingin2H23TheliquidityandcreditpolicyshouldremainaccommodativeWemildlyreviseupDecJanFebMarourforecastfor2023GDPgrowthfrom51to54andmaintaintheforecastGDPYoYquarterly29--35VAIOYoY13-2629for2024GDPgrowthat49ServiceindexYoY08-2530RetailsalesYoY18-2126FAIYoYYTD51-4847ChinasconsumptionrecoveryhastwodifferentsidesWeseebothbrightExportsofgoodsYoY998570100ImportsofgoodsYoY75605040spotsandunderlyinguncertaintyinChinasconsumptionrecoveryAstheCPIYoY18212319ChinesepeoplestarttogooutforworkorpleasuretransportationcateringPPIYoY07081320RMBloansYoY111113117118travelaccommodationrecreationclothingfootwearcosmeticsandM2YoY118126124122personalcarerapidlyrecoverWeseecrowdpeopleinstationsbusytrafficinSocialfinancingRmbtrn13601445NewRMBloansRmbtrn14491536citiesandmorecustomersinshoppingmallsindicatinghousehold3MShibor242236239241consumptioniswellonitswaytorecoverHoweverChinasconsumption10YT-bondrate284290289291SourceWindCMBIGMrecoverymayalsohavesomeweaknessesAsasignofweakconfidenceChinesehouseholdscontinuedtorepaytheirmortgagedebtinadvanceandincreasesavingsinJanuaryChinascoreCPIpickedupverymildlyasconsumptionforkeyitemsimprovedveryslowlyTheresidentialCPIcontinuedtodeclineastheemploymentandincomeconditionwasstillweakWebelievetheseveredamagetoconsumerconfidencelastyearandChinesehouseholdspreferenceforprecautionarysavingsindicatesagradualresumptionofconsumptioninfutureHousingmarketmayseeanonlinearrecoveryChinashousingmarketmayseethefirstroundofrecoveryinnextfewmonthsasdepresseddemandsduringlockdownsgraduallyreleaseandhousingpricesstarttostabilizeintieronecitiesTherecoverypacemayslowagaininfutureafterthepostponeddemandisexhaustedandthepolicyprospectmarginallychangesChinesepolicymakersareveryidealisticastheyareusedtoseekingabalancebetweenmultipletargetsAstherecoverypaceslowsagainthepolicymayalsobeadjustedTosumupChinashousingmarketwillgraduallyresumewithsomefluctuationsintherecoverypaceWeexpectgrossfloorareaforcommoditybuildingsandpropertydevelopmentinvestmentrespectivelytodrop75and5in2023afterdecreasing243and10in2022LiquiditycreditpolicymayremainaccommodativeThepossibilityofadditionalcreditlooseningmaydeclineinneartermasnewloansweremuchstrongerthanexpectedinJanuary-Februaryandthesecond-handhousingmarketintier-onecitiesnoticeablyrecoveredHowevertheliquidityandcreditpolicyshouldremainaccommodativethisyearTheGDPgrowthremainsbelowpotentialgrowthandthereflationriskisquitelowTherecoveryisnonlinearandunbalancedindifferentsectorsHousingmarketdurableconsumptionandprivatecapexshouldresumeinagradualmannerPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1MOREREPORTSFROMBLOOMBERGRESPCMBRGOORhttpwwwcmbicomhk21Feb2023Chinamaycontinuewiththepro-businessshiftinnexttwoyearsThepandemichousingmarketslumptechregulatorycrackdownandSino-UStensionsmakeitmoredifficultforChinatoachieveits14th5Yplantargetsand2035visiongoalsAfterbeingclearlyawareofthechallengesChinahasrapidlyadjustedvariouspolicieswithapro-businessshiftalmostovernightThecountrydismantledzero-CovidpolicylaunchedrescuepolicyforpropertydeveloperschangedpolicystancetowardsinternetgiantsandtookeffortstoimprovetieswithothercountriesForlocalgovernmentofficialsboostingGDPgrowthandattractingcapitalbecametheirimportantKPIsagainHoweverprivateentrepreneursmayneedsometimetorestoretheirconfidenceastheeconomyrecoveryshouldbeinagradualmannerThereforeChinamaycontinuewiththepro-businessshiftin2023-2024PLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE221Feb2023Figure1ChinaEconomyForecast20092010201120122013201420152016201720182019202020212022F2023F2024FGDPRealGDPYoY941069679787470686967602284305449NominalGDPUStrn5161768596104110112123139143147178180190211PercapitaGDPUS3823454155976280705775867923806587979880101241040412615127201348714940InflationYoYGDPdeflator02698023211100154335120546221121CPI07335426262014201621292509202225PPI54556017191952146335031881410516GDPbyindustryYoYAgriculture40434245384139334035313171414143Industryconstruction10312710784807259605958492587384647-VAIO110157139100978361606662572896364949Service96979580838388818380721985236252ContributiontoGDPGrowthpptConsumption54506344394249453943350253103935Investment80673933413316312729171811151311Netexports40110602020105080305080617050203DemandindicatorsYoYFAI304245238206196157100817259542949514652-Manufacturing266269318220185135814248953122135916060-Propertydevelopment161332279162198105106970959970441005030-Infrastructure42218565137212203173157149183334021158050Retailsales159188185145131120107104102908039125026855Exportsofgoods160313203797860297779990536296703565Importsofgoods112388249437205143551611582706301110545MonetaryconditionsM2YoY2771971361381361221331138181871019011811095M1YoY3242127965933215221411815448635376672NewRMBloansRMBtrn968075828998117127135162168196200213237254TotalsocialfinancingRMBtrn139140128158173165154178262225256349314320352380RRRforlargebanks1551852102002002001751701701451301251151101009510YT-bondrates3733900003584563622833023883243143142772843002951YLPR5735514304304304304304304303653553555YLPR480465465430415415PublicfinanceFiscalrevenueYoY11721325012910286584574623839107066050FiscalexpenditureYoY21917821615311383132637687812903615040Generaldeficitratio27251815202124292926283731283128SpecialfundrevenueYoY9339235218119348226120106482060050SpecialfundexpenditureYoY9737918177117327321134288372570120LGspecialbondquotaGDP051015223732303129BOPExchangeratesTradesurplusofgoodsGDP48403036374253443927283532383031TradesurplusofserviceGDP05040609132020212121181006050709CurrentaccountbalanceGDP48391825152327171502071718231517FinancialaccountbalanceGDP38463404360540370912010402040103ErroromissionGDP08090210070618191713091109110709ForexreserveUStrn240285318331382384333301314307311322325315320310USRMBspotrateyear-end683659630623605620649695651687697654637695660650SourceWindCMBIGMPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE321Feb2023MobilityinChinaafterEconomicReopeningPassengerflowChinasdailypassengerflowhasstoppedgrowinginthelastseveraldaysoftheSpringRush春运ItseemedsomeruralmigrantworkerschosetostaywithfamilyforlongerthanusualasmanyhadntseentheirfamilymembersforalongtimeSomemigrantworkershadnotfiguredoutwhethertheyshouldreturntocitiestolookforjobsbecauseoftheuncertaintyinurbanlabormarketChinasprivateSMEsabsorbed80ofurbanemploymentbuttheysufferedalotlastyearPrivateentrepreneurswerestillverycautiousoncapexandlaborexpansionItmaytakesometimeforthemtorestoretheirconfidenceandlabordemandFreightflowDailyaveragetruckflowinexpresswaysincreasedby372inthefirsthalfofFebruarycomparedtotheaverageinJanuaryButitwasstill122lowerthantheaveragelevelin2H22FreightthroughputofChinasmajorportsincreased133YoYinthefirsthalfofFebruaryafterdropping15YoYinJanuaryandrising09YoYin2022Inner-citytrafficflowTrafficflowindicatorshavesignificantlyreboundedincitiesaspeoplebecamefreetogooutWuhanSuzhouChangshaBeijingShenzhenNanjingChengduShijiazhuangShanghaiandGuangzhousawsignificantincreasesintheirtrafficcongestionindexesinFebruaryaftermildYoYdeclinesformostinJanuaryMeanwhilesubwaypassengerflowinmostcitiesinFebruaryresumedtotheiraveragelevelsin2021MoviemarketRecreationactivityespeciallyoftheyouthrecoveredrapidlyasdailyfilmaudienceflowhasmaintainedasimilartrendlikein2019aftertheCNYholidayThenumberoffilmaudienceandboxofficerespectivelyincreasedby46and98YoYyeartothe18FebruaryFigure2DailyPassengerFlowDuringtheSpringRushFigure3DailyNumberofFlightsSourceWINDCMBIGMSourceWINDCMBIGMFigure4YoYChangeofDailyAverageTrafficCongestionIndexbyCitySourceWindCMBIGMPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE421Feb2023Figure5SubwayPassengerFlowWeeklyAveragemilliondaymillionday1287106856443221002020201920212022202320202019202120222023BeijingShanghaiGuangzhouShenzhenChengduWuhanmilliondaymillionday3042532021510105000202020212022202320192020202120222023ChongqingNanjingZhengzhouSuzhouChangshaXiamenSourceWINDCMBIGMFigure6FreightContainerThroughputofPortsFigure7DailyNumberofFilmAudiencemillion7DMA25201510500207010304050608091011122019Y2022Y2023YSourceWINDCMBIGMSourceWINDCMBIGMHousingMarketAutoSalesConstructionActivityinChinaChinashousingsalesnoticeablyimprovedaftertheCNYholidayasdepresseddemandsduringlockdownsstartedtoreleaseCommoditybuildingsalesvolumein30largestcitiesdeclined16YoYinthepasttwoweeksafterdropping328inJanuaryand311lastDecemberAstheCNYholidayfellinFebruarylastyearcommoditybuildingsalesvolumeincreasedby96inthefirsthalfofFebruarycomparedtotheaveragelevellastFebruaryListingpriceofsecond-handhousesinPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE521Feb2023tieronecitiesstartedtoseemildWoWincreasesinthepasttwoweeksNewhousinginventoryslightlydeclinedincorecitiesAsthedepresseddemandsduringlockdownsstartedtoreleasehousingmarketmayseenoticeableimprovementinnexttwomonthsHoweverthereshouldbesomefluctuationsofitsrecoverypacebecauseitneedssometimeforhouseholdstorestoretheirconfidenceandincomegrowthPassengervehiclesalesalsosharplyreboundedduetobaseeffectandtransportdemandimprovementPassengervehiclesalesvolumeincreased455YoYinthefirsthalfofFebruarythankstobaseeffectandresumptionoftransportdemandCapacityoperationrateofsemi-steeltyrealsoreboundedsharplyaftertheCNYholidayConstructionactivityseemedweakerthanexpectedCapacityoperationrateofdeformedsteelbarandasphaltplantonlyslightlyreboundedaftertheCNYholidayConstructionmaterialpriceswerestableaftersomemildincreasesinJanuaryWebelievetotalfixedassetinvestmentgrowthmaybebelowmarketconsensusinthefirsttwomonthsaspropertydevelopmentinvestmentmaycontinuetoshrinkandinfrastructureinvestmentgrowthislikelytoseesomeslowdownFigure8YoYGrowthofCommodityBuildingSalesFigure9ListingPriceIndexofSecond-handHouseYoY2YCAGRfor2021index01012015100902507023050210190301701015010130301109050702017201820192020202120222023Tier1citiesTier2citiesTier1citiesTier23citiesTier3citiesTier4citiesSourceWINDCMBIGMSourceWINDCMBIGMFigure10NewHousingSupplyin10CitiesFigure11AutoSalesVolumethousandunitsmonthsYoY9003570808003050700702530600605002010400151050300301040200505100703000902020172018201920202021202220232015201120122013201420162017201820192020202120222023NewhousingsupplyforsalesLHSPassengervehiclesalesLHSMonthofsupplybasedon60DsalesRHSCapacityoperationrateofsemi-steeltyreRHSSourceWINDCMBIGMSourceWINDCMBIGMNote10citiesincludeBeijingShanghaiGuangzhouShenzhenHangzhouNanjingQingdaoSuzhouNanchangXiamenPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE621Feb2023Figure12CapacityOperationRateFigure13SteelConstructionMaterialPriceindex902001808016070140120601008050604040203002014201620182020202220DeformedsteelbarConstructionmaterial20162017201820192020202120222023DeformedsteelbarAsphaltplanIronoreSourceWINDCMBIGMSourceWINDCMBIGMChinaExportsandUSRecessionRiskChinasexportsmaycontinuetodeclinewithsomemildimprovementinthefirsttwomonthsSouthKoreasforeigntradeexperiencednoticeablefluctuationsinitsYoYchangesinthepastthreemonthsItdeterioratedinJanuaryandimprovedinFebruaryprobablyduetoatemporaryimprovementofglobalconsumersentimentamiddisinflationHoweverSouthKoreastradewithChinashowedadifferentpatternintheYoYchangesIttemporarilyimprovedinJanuaryanddeterioratedagaininthefirsttendaysofFebruarySouthKoreastradewithChinahasaparalleltrendwithChinastotaltradeperformanceWeexpectChinasexportsmaytemporarilyimprovein2M22beforedeterioratingagaininMarchWemaintainourforecastthatChinasexportsofgoodsmaydropby35in2023afterrising71in2022USleadingindicatorscontinuedtosendwarningsignalsforarecessionaheadUSretailsalesCPIandPPIinJanuaryallbeatexpectationsindicatingaresilienteconomywithpersistentinflationinthecountryThelatestdataindicatesarecessionmaynotcomesoonTheFedstighteningcyclemaylastlongerthanexpectedwhichwilladddownsidepressureonthegrowthinthefutureWecannotruleoutthepossibilityofarecessionforUSeconomythisyearBoth10Y3Mand10Y2YTreasuryyieldcurvesremainedinvertedindicatingtherecessionriskisstillthereIfwelookatUSeconomybysectorconditionhasvariedindifferentsectorsHousingmarkethasalreadybeeninadeeprecessionastheresidentialinvestmentdroppedbyover10YoYin2022ThemanufacturingsectorhasbeenclosetothecriticalpointofarecessionasitsPMIremainedbelow50inthepastthreemonthsandtheindustrialoutputgrowthslowedfrom39in2022to08inJanuaryHoweverservicesectorhascontinuedtoexpandServiceconsumptionatconstantpricegrew33YoYlastDecemberandservicePMIreached552inJanuaryFinancingcostsforUSprivatesectorslightlyreboundedaftermilddeclinesTheFedofficialssentmorehawkishsignalsaftertheeconomicdatabeatexpectationsUSbondratesandmortgageratesslightlyreboundedinFebruaryaftersomemilddeclinesinJanuaryThe2YTreasurybondyieldswhichissensitivetoUSFedpolicyratepathinfutureincreasedbyover40bpsinthepast30daysThe30Yfixed-ratemortgagecostsincreasedbyover20bpsinFebruaryMeanwhilebanksLPRsfurtherroseby25bpsPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE721Feb2023Figure14GrowthofSouthKoreaExportsImportsFigure15ChinaExportsofGoodsYoY7060504030201001020302017201820192020202120222023ChinaexportsofgoodsKoreaimportsofgoodsfromChinaSourceWINDCMBIGMSourceWINDCMBIGMNotethelatestmonthcoveredthefirst20daysFigure16USTermSpreadasALeadingIndicatorforFigure17USBreakevenInflationtoReflectInflationRecessionRiskExpectationsppt4043032010200101200199420141988199019921996199820002002200420062008201020122016201820202022US10Y-3MT-bondTermSpreads2015201620172018201920202021202220235Ybreak-eveninflationUS10Y-2YT-bondTermSpreadsSourceWINDCMBIGMSourceWINDCMBIGMFigure182YT-bondRatesPrecedeFedPolicyRatesFigure19FedsAssetsinItsBalanceSheetUSbn690005800070004600035000400023000200011000002011201820072008200920102012201320142015201620172019202020212022202320072008200920102011201220132014201520162017201820192020202120222023Federalfundrates2YT-bondratesOtherassetMBST-bondsSourceWINDCMBIGMSourceWINDCMBIGMPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE821Feb2023Figure20FinancingCostsofUSPrivateSectorFigure21USM2andBanksCreditSupplyYoY40353025201510505202320222021202020192018201720162015201420132012M2supplyBankscreditsupplyConsumercreditSourceWINDCMBIGMSourceWINDCMBIGMFigure22USMortgageRatesDemandFigure23LeadingindicatorsforUSEconomyindexindexYoY83501701516073101015062701405523013004120190531102150100102015202020222014201620172018201920212023201320152011201220142016201720182019202020212022202330YMortgageratesLHSECRIleadingindicatorLHSMortgageapplicationvolumeRHSWeeklyretailsalesdeflatedbyCPIRHSSourceWINDCMBIGMSourceWINDCMBIGMFactoryActivityinChinaFactoryactivityhasgraduallyimprovedaftertheCNYholidaywithapossibleYoYmoderategrowthThedailyaveragecoalconsumptionofpowergeneratorsinSouthChinainthefirsthalfofthisFebruaryincreasedby97comparedtotheaveragelevellastFebruaryThedaysoftheircoalinventorylastweekdroppedtoasimilarlevelseeninthesimilarperiodlastyearHoweveroutboundcoalvolumebyshipinQinhuangdaoportrecoveredmoreslowlywithdeclinesofitscoalpricesDuetoresumptionofcoalimportsespeciallyfromAustraliacommercialtradersacceleratedsalesoftheirinventorycausingdownsidepressureondomesticcoalpricesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE921Feb2023Figure24PowerGeneratorsCoalConsumptioninFigure25OutboundCoalVolumePriceinSouthChinaQinhuangdaoPortmilliontonDaysthousandtonRMBTon2628800180024261600700222414002022600120020181000185001616800141440060040012123001010200200020232020202120222022-012022-022022-032022-042022-052022-062022-072022-082022-092022-102022-112022-122023-01DailycoalconsumptionLHSOutboundvolumeofcoalLHSDaysofcoalinventoryRHSThermalcoalpriceRHSSourceWINDCMBIGMSourceWINDCMBIGMCommodityInflationChinasReflationProcessCommodityinflationwillfurtherdeclineCommoditypricesslightlydeclinedastheprospectoffurthertighteningbytheFedeclipsedtheboosteffectfromChinasreopeningGlobaleconomyshouldcontinuetoseedownsidepressurewithhighinterestrateswhileChinasrecoverymayfollowagradualmannerThereforecommoditypricescanhardlyseeanotherboomingcyclethisyearDuetobaseeffectcommodityinflationwillfurtherdeclineGlobalM2growthasaleadingindicatorgenerallyprecedescommodityinflationM2growthhasremainedlowrecentlyindicatingcommoditypricesmayhaveadditionaldownsideroomaheadChinasreflationpressureremainsmoderateChinasreopeninghascausedareflationinsomeservicesectorslikeairtransportationhotelrecreationasdemandresumedfasterthansupplycapacityinthosesectorsHowevertheoverallreflationpressurehasremainedmoderateThedeclineofporkpricehasrestrainedfoodinflationwhileweakdurableconsumptioncapedcoreCPIgrowthChinas2YTreasurybondrateswhicharesensitivetocoreinflationexpectationshaveonlymildlyclimbedrecentlyRecentinformationindicatesChinasPPImayfurtherdeterioratewithmoresignificantYoYdeclinesinnext2-3monthsbeforeseeingpositiveincreasesin2H23ResidentialCPIhaveonlymildlyimprovedrecentlyasitneedssometimefortheemploymentandincomeconditiontonoticeablyimproveThewholesalereferencepriceofKweichouMoutaihasalsoslightlyrisenindicatingamoderaterecoveryinbusinessactivityFigure26BDICommodityPriceFigure27GlobalM2GrowthCommodityInflationindexindex610040051003504100300310025021002001100150100100201520162017201820192020202120222023BDILHSRJCRBcommodityindexRHSSourceWINDCMBIGMSourceWINDCMBIGMPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1021Feb2023Figure28US10YRatesGoldPriceFigure29US10YRatesCopper-to-GoldRatioUSounceUSounce4220058320005473180024616003214003511200214100020180031116000224002010201120212009201220132014201520162017201820192020202220232023202220212020201920182017201620152014201320122011201020092008200720062005US10YT-bondratesLHSUS10YReal-termrateLHSGoldpriceRHSCoppertogoldpriceratioRHSSourceWINDCMBIGMSourceWINDCMBIGMFigure30AgriculturalPriceinChinaFigure31LiveHogPriceinChina2015100RmbKgX1504525140403520130302515120201015110105510000902017201520162018201920202021202220232018201920202021202220232014AgriculturalproductpriceVegetablepriceLivehogpriceLHSLivehogtocornpriceratioRHSSourceWINDCMBIGMSourceWINDCMBIGMFigure32WholesaleReferencePriceofMOUTAIFigure33ModerateCoreCPIReflationinChina43210120162017201820192020202120222023ChinaCoreCPIgrowthChina2YT-bondratesSourceWINDCMBIGMSourceWINDCMBIGMPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1121Feb2023Figure34ChinasCPICoreCPIGrowthProjectedFigure35ChinasPPIResidentialCPIGrowthbyAIProjectedbyAISourceWINDCMBIGMSourceWINDCMBIGMChinasLiquidityConditionRMBexchangeRatesLiquidityconditionLiquidityconditionhasremainedstablerecentlyasmoneymarketrateskeptaround2AsriskappetiteandcreditdemandhasreboundedliquiditydemandhasincreasedinthepastseveralweeksThishascausedupsidepressureonmoneymarketratesDR007orbanks7Dreporatesrosefrom17in4Q22to19inJanuaryand2inFebruaryHoweverwedonotexpectthePBOCwillsignificantlytightentheliquidityconditionastheresumptionofhousingmarketshouldbegradualandthereflationpressureshouldbemoderateBondmarketLong-termbondratesmildlyroseafterChinaannouncedtoreopenitseconomyHowevertheymaygraduallyloseupsidemomentumasthemarketispricedintherecoverystoryChinasresumptionshouldbeinagradualmannerwithamoderatereflationFromthemediumtolongtermperspectivethegrowthshouldslowdownagainaftertheresumptionperiodThereforeChinaslong-termbondratesmayonlyseemoderateupsideroomintheeconomicresumptioncycleCreditconditionCreditdemandfromLGFVsandSOEshasnoticeablyreboundedPrivatebusinessandhouseholdsresumedmoreslowlyNewloansmaycontinuetoimproveinFebruaryasbanksbilldiscountingrateshavecontinuedtoriseTheYoYgrowthoftotalsocialfinancingbalancemaymildlyreboundinFebruary-MarchCreditpolicyhasremainedaccommodativeformanufacturingservicebusinessSMEsThePBOChasguidedbankstoexpandspecialloansupplytoindustrialupgradingtechinnovationgreendevelopmentprojectsToboosthousingmarketrecoverythecentralbankmayfurthereasemortgagepolicyforupgradinghousingdemandorsecond-homepurchasersinfutureRMBexchangeratesRenminbimildlydepreciatedagainstUSdollarinthepasttwoweeksTheUSdollarindexreboundedasFedofficialsseemedtobemorehawkishafterthegrowthandinflationdatabeatexpectationsInadditioninvestorsbullishexpectationsaboutChinasrecoveryalsoretreatedLookingforwardrenminbimayseefurthermilddeclinesbeforereboundingin2H23WemaintainourforecastonUSRMBspotrateat660atend-2023PLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1221Feb2023Figure36PBOCPolicyRatesFigure37ChinasMoneyMarketFundingCost50504545404035303525302025152010152019202020212022202310PBOC7DrepoBanks7Drepo201620172018201920202021202220231YLPR5YLPRYueBao3MShibor6MNCDSourceWINDCMBIGMSourceWINDCMBIGMFigure38ChinaT-bondRatesFigure39TSFBalanceM2GrowthProjectedbyAIbps65605550454035302520201620172018201920202021202220237YTreasurybond7YAAAcorporatebond7YAAcorporatebondSourceWINDCMBIGMSourceWINDCMBIGMFigure40USRMBRatesInterestSpreadsFigure41NorthboundInflowtoASharespptUSRMB37517016535602008200920102011201220132014201520162017201820192020202120222023US-Sino2YT-bondspreadLHSUSRMBspotrateRHSSourceWINDCMBIGMSourceWINDCMBIGMPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1321Feb2023Figure42USHKDRatesInterestRatesFigure43SouthboundInflowintoHKStocksUSHKD78560504078030201077500201520162017201820192020202120222023USHKDLHS3MLiborRHS3MHiborRHSSourceWINDCMBIGMSourceWINDCMBIGMChinaEconomyForecastWemildlyreviseupourforecastonChinas2023GDPgrowthfrom51to54WeexpecttheGDPgrowthinthefourquartersmayrespectivelyreach357748and57comparedtothepreviousforecastof327246and55HoweverChinasGDPgrowthshouldremainbelowpotentialgrowththisyearastheexpected2YCAGRin2022-2023isonlyat42OntheGDPgrowthtargetSomeinvestorshavebeenworriedthatChinaspro-growthpolicymaynotbeasstrongasexpectedasthelowbaselastyearmakesiteasyforChinatoachieveitsGDPgrowthtargetat5orhigherthisyearHoweverwedonotthinkthe5growthtargetimplieslessimportanceattachedtothegrowthTheGDPgrowthtargetfor2023wasdecidedbythetopleadersattheCentralEconomicWorkingConferenceinearlyDecemberlastyearTheproposalwasmadebyexpertsandofficialsevenearlierAtthattimeChineseofficialswereconcernedaboutdomesticpandemicwaveasbearishforeigninvestorsconsideredthe5growthtargetwasambitiousLookingforwardtheChineseleaderswilltakeeconomicgrowthasthepriorityandGDPgrowthwillbecomeimportantKPIforlocalgovernmentsThenewleaderswilltakeeffortstoboosttheconfidenceofprivatebusinessesandhouseholdsinChinaChinasinflationmayretreatin1H23andreboundin2H23CPIgrowthmaydeclinefromabove2in2M23to17-2inMarch-Julyandgraduallyreboundin2H23WemaintainourforecastonCPIgrowthat22in2023and25in2024CoreCPIgrowthmaymoderatelyrisewithamoderatereflationinservicesectorPPImayfurtherdeclineinnextfewmonthsbeforeseeingpositiveYoYincreasesin2H23WeexpectPPItodrop05in2023andrise16in2024BroadcreditgrowthmayreboundamidcreditpolicylooseningTheYoYgrowthofoutstandingsocialfinancingmaygraduallypickupthankstocreditpolicylooseningRenminbiloansarelikelytoremainstrongHoweverM2growthmaygraduallydeclineasriskaversionsentimentdropsPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1421Feb2023Figure44ChinasGDPFAIGrowthProjectedbyAIFigure45ChinasGDPGrowthSourceWINDCMBIGMSourceWINDCMBIGMFigure46ChinasCPIGrowthFigure47ChinasPPIGrowthSourceWINDCMBIGMSourceWINDCMBIGMFigure48ChinasTSFBalanceGrowthFigure49ChinasM2GrowthSourceWINDCMBIGMSourceWINDCMBIGMPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1521Feb2023DisclosuresDisclaimersAnalystCertificationTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportinwholeorinpartcertifiesthatwithrespecttothesecuritiesorissuerthattheanalystcoveredinthisreport1alloftheviewsexpressedaccuratelyreflecthisorherpersonalviewsaboutthesubjectsecuritiesorissuerand2nopartofhisorhercompensationwasisorwillbedirectlyorindirectlyrelatedtothespecificviewsexpressedbythatanalystinthisreportBesidestheanalystconfirmsthatneithertheanalystnorhisherassociatesasdefinedinthecodeofconductissuedbyTheHongKongSecuritiesandFuturesCommission1havedealtinortradedinthestockscoveredinthisresearchreportwithin30calendardayspriortothedateofissueofthisreport2willdealinortradeinthestockscoveredinthisresearchreport3businessdaysafterthedateofissueofthisreport3serveasanofficerofanyoftheHongKonglistedcompaniescoveredinthisreportand4haveanyfinancialinterestsintheHongKonglistedcompaniescoveredinthisreportCMBIGMRatingsBUYStockwithpotentialreturnofover15overnext12monthsHOLDStockwithpotentialreturnof15to-10overnext12monthsSELLStockwithpotentiallossofover10overnext12monthsNOTRATEDStockisnotratedbyCMBIGMOUTPERFORMIndustryexpectedtooutperformtherelevantbroadmarketbenchmarkovernext12monthsMARKET-PERFORMIndustryexpectedtoperformin-linewiththerelevantbroadmarketbenchmarkovernext12monthsUNDERPERFORMIndustryexpectedtounderperformtherelevantbroadmarketbenchmarkovernext12monthsCMBInternationalGlobalMarketsLimitedAddress45FChampionTower3GardenRoadHongKongTel85239000888Fax85239000800CMBInternationalGlobalMarketsLimitedCMBIGMisawhollyownedsubsidiaryofCMBInternationalCapitalCorporationLimitedawhollyownedsubsidiaryofChinaMerchantsBankImportantDisclosuresTherearerisksinvolvedintransactinginanysecuritiesTheinformationcontainedinthisreportmaynotbesuitableforthepurposesofallinvestorsCMBIGMdoesnotprovideindividuallytailoredinvestmentadviceThisreporthasbeenpreparedwithoutregardtotheindividualinvestmentobjectivesfinancialpositionorspecialrequirementsPastperformancehasnoindicationoffutureperformanceandactualeventsmaydiffermateriallyfromthatwhichiscontainedinthereportThevalueofandreturnsfromanyinvestmentsareuncertainandarenotguaranteedandmayfluctuateasaresultoftheirdependenceontheperformanceofunderlyingassetsorothervariablemarketfactorsCMBIGMrecommendsthatinvestorsshouldindependentlyevaluateparticularinvestmentsandstrategiesandencouragesinvestorstoconsultwithaprofessionalfinancialadvisorinordertomaketheirowninvestmentdecisionsThisreportoranyinformationcontainedhereinhavebeenpreparedbytheCMBIGMsolelyforthepurposeofsupplyinginformationtotheclientsofCMBIGMoritsaffiliatestowhomitisdistributedThisreportisnotandshouldnotbeconstruedasanofferorsolicitationtobuyorsellanysecurityoranyinterestinsecuritiesorenterintoanytransactionNeitherCMBIGMnoranyofitsaffiliatesshareholdersagentsconsultantsdirectorsofficersoremployeesshallbeliableforanylossdamageorexpensewhatsoeverwhetherdirectorconsequentialincurredinrelyingontheinformationcontainedinthisreportAnyonemakinguseoftheinformationcontainedinthisreportdoessoentirelyattheirownriskTheinformationandcontentscontainedinthisreportarebasedontheanalysesandinterpretationsofinformationbelievedtobepubliclyavailableandreliableCMBIGMhasexertedeveryeffortinitscapacitytoensurebutnottoguaranteetheiraccuracycompletenesstimelinessorcorrectnessCMBIGMprovidestheinformationadvicesandforecastsonanASISbasisTheinformationandcontentsaresubjecttochangewithoutnoticeCMBIGMmayissueotherpublicationshavinginformationandorconclusionsdifferentfromthisreportThesepublicationsreflectdifferentassumptionpoint-of-viewandanalyticalmethodswhencompilingCMBIGMmaymakeinvestmentdecisionsortakeproprietarypositionsthatareinconsistentwiththerecommendationsorviewsinthisreportCMBIGMmayhaveapositionmakemarketsoractasprincipalorengageintransactionsinsecuritiesofcompaniesreferredtointhisreportforitselfandoronbehalfofitsclientsfromtimetotimeInvestorsshouldassumethatCMBIGMdoesorseekstohaveinvestmentbankingorotherbusinessrelationshipswiththecompaniesinthisreportAsaresultrecipientsshouldbeawarethatCMBIGMmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreportandCMBIGMwillnotassumeanyresponsibilityinrespectthereofThisreportisfortheuseofintendedrecipientsonlyandthispublicationmaynotbereproducedreprintedsoldredistributedorpublishedinwholeorinpartforanypurposewithoutpriorwrittenconsentofCMBIGMAdditionalinformationonrecommendedsecuritiesisavailableuponrequestForrecipientsofthisdocumentintheUnitedKingdomThisreporthasbeenprovidedonlytopersonsIfallingwithinArticle195oftheFinancialServicesandMarketsAct2000FinancialPromotionOrder2005asamendedfromtimetotimeTheOrderorIIarepersonsfallingwithinArticle492atodHighNetWorthCompaniesUnincorporatedAssociationsetcoftheOrderandmaynotbeprovidedtoanyotherpersonwithoutthepriorwrittenconsentofCMBIGMForrecipientsofthisdocumentintheUnitedStatesCMBIGMisnotaregisteredbroker-dealerintheUnitedStatesAsaresultCMBIGMisnotsubjecttoUSrulesregardingthepreparationofresearchreportsandtheindependenceofresearchanalystsTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportisnotregisteredorqualifiedasaresearchanalystwiththeFinancialIndustryRegulatoryAuthorityFINRATheanalystisnotsubjecttoapplicablerestrictionsunderFINRARulesintendedtoensurethattheanalystisnotaffectedbypotentialconflictsofinterestthatcouldbearuponthereliabilityoftheresearchreportThisreportisintendedfordistributionintheUnitedStatessolelytomajorUSinstitutionalinvestorsasdefinedinRule15a-6undertheUSSecuritiesExchangeActof1934asamendedandmaynotbefurnishedtoanyotherpersonintheUnitedStatesEachmajorUSinstitutionalinvestorthatreceivesacopyofthisreportbyitsacceptancehereofrepresentsandagreesthatitshallnotdistributeorprovidethisreporttoanyotherpersonAnyUSrecipientofthisreportwishingtoeffectanytransactiontobuyorsellsecuritiesbasedontheinformationprovidedinthisreportshoulddosoonlythroughaUS-registeredbroker-dealerForrecipientsofthisdocumentinSingaporeThisreportisdistributedinSingaporebyCMBISingaporePteLimitedCMBISGCompanyRegnNo201731928DanExemptFinancialAdviserasdefinedintheFinancialAdvisersActCap110ofSingaporeandregulatedbytheMonetaryAuthorityofSingaporeCMBISGmaydistributereportsproducedbyitsrespectiveforeignentitiesaffiliatesorotherforeignresearchhousespursuanttoanarrangementunderRegulation32CoftheFinancialAdvisersRegulationsWherethereportisdistributedinSingaporetoapersonwhoisnotanAccreditedInvestorExpertInvestororanInstitutionalInvestorasdefinedintheSecuritiesandFuturesActCap289ofSingaporeCMBISGacceptslegalresponsibilityforthecontentsofthereporttosuchpersonsonlytotheextentrequiredbylawSingaporerecipientsshouldcontactCMBISGat6563504400formattersarisingfromorinconnectionwiththereportPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE16