Cinda: Anti-insulation policy may bring a double inflection point.

Cinda released a research report stating that the core of the implementation of anti-internal competition policies in various industries is focused on capacity regulation and price guidance. Anti-internal competition policies may lead to a dual inflection point. First, "anti-internal competition" is expected to push for a turning point in overcapacity; second, as the resolution process of overcapacity accelerates, the Producer Price Index (PPI) is also expected to reach an upward turning point. However, it should be noted that during the process of "anti-internal competition," there may be a temporary decline in the growth momentum of the manufacturing industry. In order to achieve stable growth goals, it is necessary to simultaneously implement demand-side policy tools. If effective measures to expand demand are implemented, the continued implementation of the current "anti-internal competition" policy is expected to provide support for the bull market in the capital market. Cinda's main points are as follows: Anti-internal competition policies have moved from policy guidelines to gradual implementation. The starting point of the current "anti-internal competition" policy can be traced back to the meeting of the Political Bureau of the Communist Party of China in July 2024, where for the first time it was explicitly mentioned to prevent "internal competitive" malignant competition. By December 2024, the policy focus shifted from early stage risk warnings to specific regulatory actions. Since the beginning of this year, "anti-internal competition" has not only become a frequent topic at various high-level meetings, but related supporting policies have also been further implemented at the executable level, including measures such as the construction of a unified large market and ten industry stability growth plans, laying the foundation for the subsequent implementation of industry-specific policies. Different industries may have different approaches to anti-internal competition, but they all revolve around capacity regulation and price guidance. The focus of anti-internal competition strategies varies by industry, but overall, the methods used in the current implementation of anti-internal competition policies can be summarized into three main directions: controlling new capacity expansion, phasing out outdated capacity, and encouraging mergers and restructuring. Controlling new capacity expansion aims to curb disorderly expansion from the source, phasing out outdated capacity focuses on optimizing the structure of existing capacity, and encouraging mergers and restructuring can alleviate vicious price pressure to some extent. These measures mainly revolve around capacity regulation and price guidance. Anti-internal competition policies may bring about a dual inflection point. As analyzed earlier, the core of the implementation of anti-internal competition policies in various industries is focused on capacity regulation and price guidance. We believe that anti-internal competition policies may lead to a dual inflection point. First, "anti-internal competition" is expected to push for a turning point in overcapacity; second, as the resolution process of overcapacity accelerates, the Producer Price Index (PPI) is also expected to reach an upward turning point. However, it should be noted that during the process of "anti-internal competition," there may be a temporary decline in the growth momentum of the manufacturing industry. In order to achieve stable growth goals, it is necessary to simultaneously implement demand-side policy tools. If effective measures to expand demand are implemented, the continued implementation of the current "anti-internal competition" policy is expected to provide support for the bull market in the capital market. Risk factors: Unexpected delays in the progress of "anti-internal competition," sudden geopolitical risks, and the possibility of historical patterns becoming ineffective, among others.