The Rise of Precious Metals and Non-ferrous Metals

First, the rise of precious metals and non-ferrous metals continues. Last week, precious metals and non-ferrous metals continued to rise. Taking representative silver and copper as examples, on December 26, COMEX silver and COMEX copper increased by 18.0% and 6.2% respectively compared to December 19, with annual increases of approximately 172% and 45%.

What is the background for the rise of precious metals and non-ferrous metals in 2026?

First, the downward cycle of the US dollar brings changes to the global liquidity environment. With the Federal Reserve continuing to cut interest rates, the US dollar index was 108.5 on the last trading day of 2024, and had dropped to 98.0 by December 26, 2025.

Second, changes in trade order and geopolitical dynamics lead to changes in the global monetary system. Major central banks around the world are increasing their gold reserves, which drives the pricing of precious metals. For example, the National Bank of Poland has raised its target for the proportion of gold in its official reserve assets to 30%. According to data from the World Gold Council, central banks net purchased 53 tons of gold in October, a month-on-month increase of 36%.

Third, new industrial narratives bring changes in demand expectations. Silver has significant industrial properties; silver paste is a key raw material in the manufacturing of photovoltaic components, and the use of silver is also increasing in new energy vehicles. The development of new industries such as renewable energy generation, new energy vehicles, data centers, and robotics is driving additional demand for copper.

Fourth, supply growth is slow. Geopolitical risks, shrinking mine output, and rising ESG costs all constrain supply.

The annual drivers are relatively clear in consensus; what are the reasons for the accelerated rise of silver and copper in December?

First, in early November, the United States released the so-called updated list of critical minerals for 2025, which included copper and silver, thereby reinforcing the impression of these metals as strategic resources to some extent.

Second, in early December, the Federal Reserve's interest rate cut was implemented, while also moderately lowering its inflation guidance. The dot plot indicates a further rate cut in 2026 under neutral conditions. The ongoing US rate cut cycle provides some support for risk appetite in the precious metals and non-ferrous metals markets.

Third, there are concerns about the Trump administration or related tariff policies regarding copper. Since December, there has been a noticeable divergence in the trends of COMEX inventories and LME stocks. The insufficient supply of deliverable silver also adds upward pressure on prices.

The rise of precious metals and non-ferrous metals continues to form a global narrative in the short term. In the annual report "Economic Temperature Gap Narrowing, Asset Narratives Converging: Macroeconomic Outlook for 2026," we believe that "the global market in 2025 will have a series of popular macro narratives, including the long-term weakening of US dollar credit, the restructuring of global industrial and supply chains, gold as the anchor of a new round of monetary system, AI as the infrastructure for a new round of industrial chain transformation, and non-ferrous metals as the crude oil of a new stage," and "a narrative often ends in several states: one is the emergence of a landmark 'narrative peak'; two is being replaced by a stronger, alternative narrative; three is being falsified or reversed by real data. Currently, none of these situations have occurred," and "the global narrative in 2026 is expected to converge." At the same time, it is necessary to be vigilant about the risks of one-sided asset pricing. Taking silver as an example, after a significant month-on-month increase in 1979, there was a noticeable adjustment in 1980; after a significant month-on-month increase in 2010, there was a noticeable adjustment in 2011. Regarding silver futures, the Shanghai Futures Exchange issued risk control measures three times in December [6].

Second, in the fourth week of December, new asset trends strengthened while old assets experienced narrow fluctuations. Global stock markets moved in tandem, with silver and copper breaking through previous highs, leading the way for "technology + non-ferrous metals." The global bond market experienced mild fluctuations, with a weak dollar and weak yen consolidating, aiding the expansion of risk assets. The renminbi continued to appreciate, briefly breaking7**.**

First, global stock markets rose broadly, with narratives setting direction and liquidity determining elasticity. The Nikkei led the way, U.S. stocks excelled in materials and technology, while European stocks showed divergence. Our compiled asset rotation index remained basically flat, with the weekly average frequency of changes dropping to 122 times (compared to 123 times last week). Emerging markets showed significant recovery, with MSCI developed markets and emerging markets recording 1.12% and 1.71%, respectively. Over the week, the Nasdaq, S&P 500, and Dow Jones showed significant divergence, recording 1.22%, 1.40%, and 1.20%, respectively. The U.S. Q3 GDP exceeded expectations, enhancing soft landing expectations, coupled with moderate consolidation of interest rate cut expectations, leading to the anticipated "Christmas rally," with the S&P 500 fear and greed index rising sharply from a low of 99.1. As of Friday, U.S. stocks overall volatility approached historical levels again, with the VIX closing around 13.6%; VVIX at 84.24. However, structural characteristics were evident, with "narrative" assets prevailing. The S&P index rose across the board, with materials and information technology leading. The former was driven by new highs in gold and silver, while the latter was boosted by deepening AI investments. The AI sector saw significant valuation recovery, with the Philadelphia Semiconductor Index rising 5.01%. Large tech stocks (TAMAMA Technology) rose 2.86%. Meanwhile, the Russell 2000 index (small-cap stocks) lagged with a rise of only 0.2%, and the consumer goods sector fell 0.1%. After the Bank of Japan's interest rate hike, its dovish stance led to mild fluctuations in long-term Japanese bond yields, benefiting stock market valuations, with market confidence boosted by the fiscal budget proposal, resulting in a 2.51% weekly rise in the Nikkei 225. The broad European STOXX 600 lagged in gains. The German DAX index rose 0.21% for the week, while the UK FTSE 100 fell 0.27%. Despite the European Central Bank's stable monetary environment, economic divergence among European countries and ongoing fiscal uncertainties led to a relatively cautious performance of risk assets.

Second, commodities continued to demonstrate a combination of "near and far" pricing, with low inventories and tight supply realities in copper and silver being more easily driven by distant narrative expectations, leading to strong breakouts in gold, silver, copper, and platinum. London silver reached a new high, closing up 6.01%; London gold rose 3.30%, closing around $4,480.80 per ounce; both recorded YTD gains of 71.6% and 141.3%, respectively. From a price ratio perspective, the gold-silver ratio fell to 64.3, representing a rolling three-year -3.57 times standard deviation, significantly enhancing the "value" of gold relative to silver. From a technical perspective, the COMEX gold short-term RSI broke 90, indicating that short-term trading is "overbought." The implied volatility of gold has risen to 25.78%, with active trading also increasing but not yet extreme. From a funding perspective, the behavior of domestic and foreign retail investors is diverging, with net inflows into domestic gold ETFs reaching 5.17 billion yuan (compared to a net inflow of 1.39 billion yuan last week), and SPDR Global Gold ETF seeing a net inflow of 18.59 tons. In cross-market terms, New York gold futures have seen a relatively larger increase, followed by Shanghai gold, which closed at 1007 yuan per gram, with both rising 3.8% and 3.2% respectively for the week. The latest Shanghai gold premium has slightly decreased to 6.99, just below the USDCNH level of 7.0042, still implying that the pricing exchange rate has some appreciation potential. Geopolitical factors are supporting oil prices, but high inventory and weak demand still pose pressure, with Brent crude oil futures (active contracts) rising 0.28% this week. Copper prices have surged to new highs, with London copper inventories continuing to decline, and Shanghai copper also reaching new highs, closing up 5.9% this week, while London copper LME 3-month futures and New York copper active contracts rose 2.1% and 6.0% respectively. Other domestically priced commodities are relatively mild, with the BPI index rising 1.36%, and rebar futures, South China industrial product index, and South China composite index recording -0.2%, 2.8%, and 4.0% respectively.

Third, U.S. Treasury rates rose and then fell, quickly digesting economic negatives. The U.S. dollar weakened, and the yen rebounded slightly, solidifying expectations for global liquidity easing. The carry trade activity index fluctuated at a high level. The Bloomberg Global Bond Index (LEGATRUU Index) remained basically flat, rising 0.55% for the week. U.S. Treasury rates rose and then fell, quickly digesting the better-than-expected GDP data, with narrow fluctuations throughout the week. The 10-year rate fell 2 basis points to 4.14%, and the 2-year rate fell 2 basis points to 3.46%, with the 10Y-2Y yield spread remaining flat at 68 basis points this week. The VIX index for the U.S. Treasury market—the MOVE implied volatility—fell to 58.5%. Despite warnings from the Bank of Japan about market interventions, expectations for interest rate hikes next year remain relatively negative, with only the 2-year rate, which is more sensitive to monetary policy, showing a significant increase. Long-term Japanese bond rates have temporarily retreated. The 2-year, 10-year, 20-year, and 30-year rates rose 4.6 basis points, 2.4 basis points, -0.1 basis points, and -2.3 basis points respectively. Long-term bond rates in other G7 countries generally declined, with the 30-year ultra-long bond rates in France, Italy, and the UK falling by 4.8 basis points, 4.5 basis points, and 4 basis points respectively. The U.S. dollar fell 0.69% this week, dropping to 98.03. The U.S. dollar against the euro fell 0.53%. The yen rebounded somewhat, with the U.S. dollar against the yen falling 0.74%, closing at around 156.56. Global carry trade activities relying on the "low volatility, low interest" yen have risen to 255.4. Yen volatility has increased, with implied volatility (1M ATM) rising to around 8.52%. The scale of yen carry trades has been growing since April 2025, but due to strong reversals in last year's positions, current short yen positions are still not extreme, with net speculative positions slightly below 0. However, the cost-effectiveness of carry trades has been declining since July 2024, and the current cost-effectiveness is once again narrowing rapidly, with the carry activity index showing top-side fluctuations The renminbi appreciated due to the weakening of the US dollar and the year-end settlement tide, with USDCNH falling 0.46% to 7.0042, while USDCNY also fell 0.46% to 7.0085.

Fourth, the narrative around Chinese assets and technology is active, with a marginal strengthening of the non-ferrous narrative. A share valuation deviation has risen again, while Hong Kong stocks and Chinese concept stocks have stagnated. The cyclical and growth styles significantly outperformed the value sector. Throughout the week, the Wind All A Index rose 2.78%, and the 10-year government bond yield increased by 0.68 basis points to 1.8376%. Our compiled Shenwan secondary industry rotation speed index marginally declined, with the weekly average frequency of changes dropping to 4,989 times (from 5,079 times last week). The trading volume in both markets increased, reaching an average daily turnover of 1.97 trillion yuan, a week-on-week increase of 11.63%. The proportion of margin purchases continued to rise, closing at 11.06%. The Hang Seng Technology Index and the Hang Seng Index rose 0.50% and 0.37% respectively; the overseas Chinese concept stock Nasdaq Golden Dragon Index rose 0.64% for the week.

Observing the breadth of the market. In terms of "price," the "market breadth" is steadily rising, with the proportion of constituent stocks in the Wind All A Index surpassing their own 240-day moving average rising to about 63.48% (from 63.02% last week); the proportion exceeding the 60-day and 20-day moving averages rose to 42% and 56% (from 34% and 41% last week). In terms of "volume," market concentration also rebounded, with the trading volume of the top 5% of A-share stocks accounting for 43.12% of the total A-share volume (up from 40.73% last week), reaching a historical percentile of 74.3% (up from 58.9% last week). Meanwhile, the volatility of the entire A-share market decreased, while the volatility gap between stocks and bonds widened again. The rolling 1-month actual volatility (HV) of the Wind All A Index fell to 12.6% (from 16.9% last week). The annualized volatility ratio of stocks to bonds rose from 12.74 times last week to 12.87 times. The gap between the technology and dividend extremes has reopened. The trading proportion difference between TMT and dividends rose to -0.04 times the standard deviation (from -0.24 times last week).

In terms of valuation deviation, this week the price-to-earnings ratio of the Wind All A Index closed at 22.27 times; the "Wind All A P/E - nominal GDP growth rate" is at +1.67 times the rolling five-year standard deviation (up from +1.56 times last week). If the nominal growth rate rises to 5.0% in the future, the current valuation deviation of the entire A-share market will revert to +1.4 times the standard deviation. The historical +2 times standard deviation is the extreme position.

In terms of specific styles, supported by the enthusiasm for commercial aerospace and optical modules, the innovation and entrepreneurship index has risen again. The stock market is linked, with non-ferrous stocks leading in gains under new highs for gold, silver, copper, and platinum, with significant valuation expansion. Financial consumption remains flat. The Sci-Tech Innovation 50 and the ChiNext Index rose by 2.8% and 3.9% respectively. The CSI Dividend Index rose by 0.6%. The National Value and Growth indices showed significant differentiation, recording 0.9% and 3.2% respectively. In the CITIC style, growth, cyclical, financial, and consumption sectors recorded weekly gains of 3.2%, 3.6%, 0.6%, and -0.2% respectively More than 70% of industries recorded positive returns. Non-ferrous metals, defense and military industry, and electric power equipment led the gains, recording 6.4%, 6.0%, and 5.4% respectively; the three industries with the largest declines were banking, social services, and personal care, recording -1.0%, -1.1%, and -1.1% respectively.

Third, overseas, first, the U.S. third-quarter GDP data continues to validate the soft landing logic under the interest rate cut cycle. The initial annualized quarter-on-quarter GDP for the third quarter is 4.3%, higher than the market expectation of +3.3% and the previous value of +3.8%, with significant contributions from consumption, net exports, equipment, and intellectual property investment; second, recent speeches by Federal Reserve officials generally signal that policy rates will continue to decline, but there are still differences regarding the timing and magnitude of rate cuts. Federal Reserve officials have a consistent attitude towards purchasing Treasury bonds, indicating that reserve purchases are for liquidity management, not quantitative easing.

First, the U.S. third-quarter GDP data continues to validate the soft landing logic under the interest rate cut cycle. The initial annualized quarter-on-quarter GDP (same below) for the third quarter is 4.3%, higher than the market expectation of +3.3% and the previous value of +3.8%. The core PCE price index increased by 2.9% on an annualized quarter-on-quarter basis, in line with expectations and higher than the previous value of 2.6%.

From the structure of the U.S. third-quarter GDP, household consumption and net exports were the main contributors; residential and construction investment were the main drags. Personal consumption expenditures increased by 3.5% on an annualized quarter-on-quarter basis, higher than the previous value of 2.5% and the expectation of 2.7%. Additionally, the BEA revised the consumption growth rate for July to September upward. In terms of trade, the rebound in exports and the decline in imports contributed 1.6 percentage points to GDP growth from net exports. Private domestic final sales, including non-government consumption and fixed investment, increased by 3% on a quarter-on-quarter annualized basis, compared to the previous value of 2.9%, reflecting relatively stable private sector demand. Corporate fixed investment increased by 2.8% quarter-on-quarter, in line with expectations, with construction investment down 6.3% quarter-on-quarter, but equipment investment and intellectual property investment both increased by 5.4% quarter-on-quarter, driven by continued AI-related investments (data centers, power structures, IT equipment, and software). We estimate that excluding imports, AI contributes approximately 0.18 percentage points to GDP growth.

In simple terms, the third-quarter GDP data continues to validate the soft landing logic under the interest rate cut cycle. The resilience of the consumption side has driven a significant recovery in corporate profits (quarter-on-quarter annualized rate +4.2%, previous value +0.2%), effectively transmitting to the employment side, supporting a rebound in private sector hiring, thereby establishing a positive cycle of "consumption - profits - employment." However, the marginal rise in inflation readings constitutes a core risk point. Looking ahead to 2026, under the resonance of the tax reduction dividends from the OBBBA Act, labor market recovery, and wealth effects, total demand is expected to rebound further. If combined with supply-side rigidity, the expansion of demand and limited supply may enhance inflation stickiness, thereby causing substantial disturbances to the Federal Reserve's future monetary policy path. Refer to the report "How to View U.S. Third-Quarter GDP." Second, recent speeches by Federal Reserve officials have generally released a clear signal that the federal funds rate will continue to decline further, but there are still significant differences regarding the timing and magnitude of rate cuts. Dovish officials like Waller and Miran believe that rate cuts should be brought forward against the backdrop of a weak labor market; while hawkish officials like Bostic and Goolsbee argue for caution, suggesting that rate cuts should wait until it is confirmed that the inflationary pressures from tariffs are temporary. Centrist Chair Williams insists on data dependence. Federal Reserve officials share a consistent attitude towards purchasing Treasury bills (T-bills), stating that reserve purchases are for liquidity management, not quantitative easing (QE).

Regarding inflation, the divergence among Federal Reserve officials mainly focuses on the impact of inflation. Waller believes that the current inflation exceeding the target is only a temporary phenomenon. He thinks that although inflation is above target, it will begin to decline in the next three to four months. ("I'm not particularly worried about it. It is above target and I believe it will start coming down in the next three to four months.") [7]. Miran's view is more aggressive; he believes the central bank should look through this supply-side shock. He estimates that the impact of tariffs on consumer prices is about 0.2%, considering it just noise ("in the neighborhood of two-tenths of a percent—noise.") [8]. However, hawkish officials like Bostic and Goolsbee are concerned about inflation stickiness. Goolsbee explicitly stated that he needs to see more evidence before rate cuts ("what we need is some assurance that this thing [tariff-induced inflation] is transitory.") [9].

In terms of the labor market, dovish officials believe that the weakness in the U.S. labor market is the strongest driving force behind rate cuts. While Williams and others think the market is just gradually cooling down, Waller believes that official data may mask the real weakness. ("not a healthy labor market...the jobs numbers are about 50-60k per month the last couple of months...we know that's too high and these are likely to get revised down...is close to zero job growth.") [10] Regarding future monetary policy, Federal Reserve officials are divided into two camps: data-dependent and preemptive rate cut. Williams emphasized that the committee is "carefully assessing incoming data, the evolving outlook, and the balance of risks." He believes that the current interest rates are slightly above neutral levels and will eventually come down, but more clear data guidance is needed. However, Miran is concerned about the future economic outlook, arguing that the current restrictive policies will lead to inflation below 2% and damage the labor market, thus advocating for larger rate cuts now.

Regarding the balance sheet, Federal Reserve governors unanimously agree that buying short-term bonds is not quantitative easing (QE). Waller believes that buying short-term bonds is mainly to address the natural growth of bank reserves (organic growth) and liquidity fluctuations brought by the tax season, which has little impact on the short-end interest rate curve. Williams also believes that QE is aimed at lowering long-term interest rates, while their current operations are just to ensure there is an appropriate level of reserves.

Fourth, high-frequency models show that the short-term economy is still experiencing "price increases and volume decreases." In December, non-ferrous metals have been strong for four consecutive weeks, and black metals are stable, supporting a new increase in PPI. Meanwhile, actual GDP, retail sales, and industrial output continue to slow down as the base rises. It is expected that the actual and nominal GDP for December will be 4.18% and 3.80% (compared to 4.22% and 3.81% in November), with the deflator index slightly rebounding to -0.38%.

In the fourth week of December, production stabilized during the off-season, and exports to the U.S. slowed as expected. Considering the rising base, it is anticipated that industrial output growth will slow to 4.59% compared to November. In terms of industrial production, in the fourth week of December, the year-on-year operating rate of all-steel tires for automobiles continued to decline, while the operating rate of coking shifted from increase to decrease. The operating rates of semi-steel tires for automobiles and ground refining remained stable year-on-year, while PTA operating rates, asphalt operating rates, and blast furnace operating rates improved year-on-year. Export prices remained stable while volumes decreased; freight rates remained resilient, with the freight rates for the West Coast and East Coast routes to the U.S. changing week-on-week by -0.5% and 1.5% respectively (compared to -0.9% and -1.3% last week); the Northern International Container Freight Index (TCI) (Tianjin - U.S. West Coast main port) saw a growth rate converge to 0.7% (compared to 5.5% last week). Additionally, the year-on-year decline in "volume" for exports to the U.S. continued to expand, with TRV showing that the number of container shipments and tonnage from China to the U.S. had a monthly average year-on-year change of -23.96% and -31.80% (compared to -19.2% and -15.8% last week) In terms of social retail, the decline in automobile sales in the fourth week of December narrowed year-on-year. From December 1 to 21, nationwide passenger car manufacturers wholesaled 1.302 million vehicles, a year-on-year decrease of 23% compared to December last year. The year-on-year decline in new home sales in 30 cities remained consistent with the previous value. Travel-related metrics, such as passenger volume in the top ten cities and congestion conditions in 100 cities, remained relatively stable month-on-month. However, considering that the base for social retail in December has risen again, it is expected to remain low year-on-year, around 1.73%, with the service industry production index at 4.71%.

In the fourth week of December, pork prices and oil prices stabilized at low levels, and the month-on-month seasonal adjustment of the core CPI improved slightly (-0.06%→0.02%). Coupled with the advantage of a lower base for the CPI in December, it is expected that the month-on-month CPI for December will be 0.01%, and the year-on-year CPI will be 0.71%, unchanged from November. The annual growth rate is expected to return to around 0. Industrial product prices showed mixed trends, with non-ferrous metals (copper, aluminum, tin, etc.) remaining strong for four consecutive weeks, while cement prices shifted from rising to falling, thermal coal prices fell while coking coal prices rose, rebar prices remained stable month-on-month, and chemical prices shifted from falling to rising. In terms of base pressure, the base pressure for the PPI in December has slightly increased. It is expected that the month-on-month PPI for December will be -0.08% and the year-on-year PPI will be -2.09%, with the fourth week year-on-year at -2.20%. The BPI index rebounded 1.36% week-on-week this week, and based on the regression model of the BPI, the year-on-year PPI for December is expected to be -1.89%. It is expected that the deflator index will maintain a moderate recovery channel, with the year-on-year figure for December possibly rising to -0.38% (with -0.74% and -0.41% for October and November, respectively).

Narrow liquidity continues to be loose, in December, the net injection of MLF and reverse repos decreased, and the scale of government bond transactions may see moderate expansion. The central bank held a quarterly monetary policy committee meeting, where it did not mention lowering the reserve requirement ratio or interest rates, indicating that short-term market policy expectations are likely to weaken; it emphasized "grasping the strength, rhythm, and timing of policy implementation," adding "timing" compared to the third quarter, suggesting that changes in the economy and financial markets may not have reached the policy threshold; it removed the expression "increase the intensity of monetary credit," possibly to smooth the credit rhythm and avoid being overly proactive; and it deleted "preventing fund circularity," as circularity has been initially constrained and is no longer a policy focus.

Fifth, this week, narrow liquidity further loosened, with DR001 falling from 1.27% to 1.26%, setting a new low for the year; DR007 increased due to year-end factors, rising from 1.44% to 1.52%. In addition, this week the central bank conducted MLF operations, with a net injection of 100 billion yuan, combined with a previous net injection of 200 billion yuan from reverse repos, totaling a net injection of 300 billion yuan for the month, lower than the stable 600 billion yuan per month from August to November. We understand that this may be partly due to relatively loose liquidity in December, reducing the necessity to further expand liquidity injection; on the other hand, the scale of government bond transactions has not yet been disclosed, and the central bank may replace MLF and reverse repos with a moderate increase in net government bond purchases This week, the central bank held its fourth quarter monetary policy committee meeting, and there are four changes worth noting compared to the third quarter and the Central Economic Work Conference.

First, the phrase "flexibly and efficiently use various policy tools such as reserve requirement ratio cuts and interest rate cuts" was not mentioned; instead, it was changed to "comprehensively use various tools." We understand this mainly aims to downplay market expectations for easing, maintain reasonable interest rate comparisons, avoid policy lagging behind market curves, and enhance the initiative in policy operations.

Second, it emphasized "grasping the strength, rhythm, and timing of policy implementation," with the addition of "timing" compared to the third quarter. This indicates that the central bank may operate more flexibly and make decisions based on fluctuations in the economy and financial markets in the next phase, and the current changes have not yet reached the threshold for easing.

Third, the phrase "increase the intensity of monetary credit issuance" was removed. We understand that this continues the expression requirements from the third quarter monetary policy execution report, downplaying credit scale and focusing more on changes in comprehensive indicators such as social financing and M2; on the other hand, it aims to smooth out the credit rhythm for next year, avoiding excessive front-loading in the first quarter.

Fourth, the phrase "prevent fund circular flow" was removed. We understand that after a round of concentrated measures to curb circular flow in Q2 2024, circular flow has been initially constrained, and it is no longer a policy focus in the short term.

Sixth, this week, the fund availability rate has shifted from decline to increase. Infrastructure cement data shows significant regional differentiation in construction commencement. For the whole year, the direct supply of infrastructure cement has decreased by -4.3% year-on-year, a decline compared to 2024. Recently, some regions have disclosed their bond issuance plans for the first quarter, totaling about 1.2 trillion yuan.**

According to a century-long construction survey, as of December 23, the fund availability rate for sampled construction sites was 59.71%, an increase of 0.18 percentage points week-on-week. Among them, the fund availability rate for non-residential construction projects was 60.8%, an increase of 0.15 percentage points week-on-week; the fund availability rate for residential construction projects was 54.5%, an increase of 0.35 percentage points week-on-week.

This period's fund availability rate has shifted from decline to increase, with the improvement in residential construction projects being greater than that in non-residential construction projects. During the survey period, only construction projects in Central China showed significant improvement in payment collection, while projects in East China exhibited varying increases and decreases, showing significant differentiation.

This week's infrastructure cement data from Century Construction indicates that although there has not been a cliff-like decline in the infrastructure sector, the growth momentum is clearly insufficient, and regional performance varies significantly due to differences in project progress and external conditions. For example, in Guangdong, Yunnan, and Guangxi, demand increased month-on-month due to favorable weather, while in Henan, Anhui, Hunan, and Sichuan, progress slowed due to environmental inspections and other reasons.

For the whole year, the direct supply of infrastructure cement in 2025 is expected to decrease by -4.3% year-on-year, down from 62% in 2024.

On the fiscal side, some provinces and cities have already announced their issuance plans for the first quarter of next year, totaling 1.2 trillion yuan. As more provinces disclose their plans, this scale is expected to continue to rise; considering that the Spring Festival in 2026 falls in February, the subsequent increase should mainly focus on March.

In addition, the Ministry of Finance recently stated that it will use 100 billion yuan from ultra-long-term special government bond funds for the National Venture Capital Guidance Fund, and it is expected that the scope of ultra-long-term special government bonds will further expand in 2026 Seventh, the National Development and Reform Commission issued a document titled "Vigorously Promote the Optimization and Upgrading of Traditional Industries," stating that in the next 5 years, traditional industries will create an "additional market space of 10 trillion yuan," corresponding to an annual compound growth rate of around 6.2%. The specific implementation paths are: first, deepen supply-side structural reforms in raw material industries such as steel and petrochemicals to achieve a basic balance between supply and demand and upgrade product structures; second, comprehensively rectify the "new three categories" industries to address "involution" competition, using market-oriented and legal methods to promote the exit of backward and inefficient production capacity and increase industry concentration; third, accelerate breakthroughs in key core technology bottlenecks in high-end CNC machine tools, ships, and other industries; fourth, for resource-constrained industries such as alumina and copper smelting, adopt a nationwide coordinated approach and localized layout, encouraging large backbone enterprises to merge and reorganize; fifth, for light industry and textiles, support product innovation, equipment updates, and technological transformation, and orderly transfer to the central and western regions and Northeast China.

On December 26, the National Development and Reform Commission published "Vigorously Promote the Optimization and Upgrading of Traditional Industries" [13], proposing specific ideas for promoting the optimization and upgrading of traditional industries during the "14th Five-Year Plan" period.

First, clarify the growth targets for traditional industries during the "14th Five-Year Plan" period. "In 2024, the added value of China's manufacturing industry will be 33.6 trillion yuan, of which traditional industries account for about 80%. It is preliminarily estimated that in the next 5 years, there will be an additional market space of about 10 trillion yuan, which will provide solid support for maintaining economic growth within a reasonable range and promoting high-quality development." Based on the 80% share estimate, the scale of added value of China's traditional manufacturing industry in 2024 is 26.9 trillion yuan. Based on the year-on-year growth of 6.5% in the added value of manufacturing in the first three quarters of this year, the corresponding scale of added value of traditional manufacturing in 2025 will be 28.6 trillion yuan, with the "additional market space of 10 trillion yuan in the next 5 years" corresponding to an annual compound growth rate of 6.2%.

Second, "for the raw material industries such as steel and petrochemicals, the key is to balance supply and demand and optimize the structure." The raw material industry should deepen supply-side structural reforms to ensure an appropriate total scale, basic balance between supply and demand, and upgrade product structures; "reduce oil, increase chemicals, and improve quality," continuously implement control over crude steel production, strictly prohibit illegal new production capacity, promote survival of the fittest, and accelerate the industry's transition to mid-to-high-end.

Third, for the "new three categories" industries such as new energy vehicles, lithium batteries, and photovoltaics, the key is to standardize order and lead innovation. Comprehensive rectification of "involution" competition is needed to increase industry concentration. Standardize market competition order, strengthen price monitoring and quality inspection, and prevent disorderly low-price competition. Strengthen supply chain governance to ensure payment to small and medium-sized enterprises. Insist on using market-oriented and legal methods to promote the exit of backward and inefficient production capacity.

Fourth, for major equipment industries such as high-end CNC machine tools and high-end ships, the key is to focus on breakthroughs and collaborative interaction. Accelerate breakthroughs in key core technology bottlenecks, speed up changes in industrial models and enterprise organizational forms, and achieve high-level technological self-reliance and self-improvement.

Fifth, for resource-constrained industries such as alumina and copper smelting, the key is to strengthen management and optimize layout. A nationwide coordinated approach should be adhered to, based on the objective differences in industrial foundations, resource endowments, and environmental carrying capacities in various regions, to construct a productivity spatial layout that is tailored to local conditions and highlights characteristics Encourage large backbone enterprises to implement mergers and reorganizations, enhance scale and group levels, and improve industrial competitiveness. Promote a new round of strategic actions for mineral exploration breakthroughs and optimize overseas mineral resource exploration and development cooperation.

Sixth, for industries such as light industry and textiles that have a large volume and wide coverage, the key lies in reducing costs, expanding volume, and improving quality and efficiency. Accelerate product innovation; support enterprises in updating equipment and technological transformation, promote digital transformation and green upgrades, and continuously reduce costs and increase efficiency; carry out quality improvement actions for key consumer goods, enhance mandatory product energy efficiency standards and safety standards; promote brand building; guide the orderly transfer of light industry, textiles, and other industries to the central and western regions and Northeast China.

Eighth, this week, the Business Society BPI index continues to rise. In terms of traditional industrial products, the foreign non-ferrous index remains strong, with silver prices leading the rise; in the domestic market, coking coal and some chemical products such as PTA have warmed up, while other products show mixed gains and losses; in the emerging manufacturing sector, lithium carbonate futures prices have reached a yearly high; among consumer goods, pork prices have fallen, while the prices of non-food items represented by the ICPI index have stabilized.

As of December 26, the Business Society BPI index recorded 894 points, an increase of 1.2% compared to the December 19 reading. The geopolitical events in Venezuela and OPEC+ production increase expectations intertwined, leading to a week-on-week (December 19) decline of 1.2% in the energy index; influenced by market sentiment and tight inventory at the London Metal Exchange, silver led the rise in the non-ferrous sector, with the non-ferrous index increasing by 4.2% week-on-week (December 19). According to the Business Society price monitoring, in the commodity price rise and fall list for week 51 of 2025 (December 22-26), there were 13 commodities in the non-ferrous sector that increased compared to the previous week, of which 2 commodities had an increase of over 5%, accounting for 9.1% of the monitored commodities in that sector; the top three commodities with the highest increase were silver (9.76%), nickel (7.05%), and copper (4.31%).

Domestic industrial product prices showed mixed trends, with coking coal, PTA, and other chemical products showing strength. As of December 26, the spot prices of thermal coal in the Bohai Rim, rebar, coking coal, and glass futures recorded week-on-week changes of -4.6%, -0.5%, 2.0%, and -1.5%, respectively. As of December 26, the China Chemical Products Price Index recorded 3912 points, an increase of 1.6% compared to the December 19 reading (previous value -0.1%), among which the PTA futures price increased by 8.7% week-on-week (previous value 3.5%); the China Cement Price Index recorded 102.44 points, a decrease of 0.5% compared to the December 19 reading (previous value 0.4%).

In the emerging manufacturing sector, as of December 26, the lithium carbonate futures price recorded 126,760 yuan/ton, a week-on-week increase of 17.2%, reaching a yearly high; the prices of lithium hexafluorophosphate and polysilicon futures recorded week-on-week changes of 0% and -2.0%, respectively; the storage chip price DXI index rose to 443,644.5 points, an increase of 8.4% compared to December 19; the China Rare Earth Price Index recorded 213.4 points, an increase of 1.9% compared to December 19 In terms of food prices, as of December 26, the average wholesale price of pork recorded by the Ministry of Agriculture was 17.43 yuan/kg, down 0.6% from December 19. The average wholesale price of 28 key monitored vegetables fell by 1.2% week-on-week, while the average wholesale price of 6 key monitored fruits rose by 3.5% week-on-week.

In terms of non-food items, the Tsinghua University ICPI total index recorded 99.70 points on December 26, up 0.09% from December 19 (previous value -0.25%). Among them, the clothing and housing sub-indices fell, while the medical care, daily necessities and services, transportation and communication, and education and entertainment sub-indices rose.

Ninth, a meeting of central enterprise leaders was held in Beijing, emphasizing the need to moderately advance new infrastructure construction during the 14th Five-Year Plan period, integrating the development of emerging industries and future industries with main responsibilities and business. Beijing adjusted its housing purchase restrictions, relaxing conditions for non-Beijing households to buy homes and supporting housing needs for families with multiple children.

[14] The meeting of central enterprise leaders was held in Beijing from December 22 to 23. The meeting conveyed important instructions from Xi Jinping. Li Qiang pointed out that the 14th Five-Year Plan period is a critical time for laying a solid foundation and making comprehensive efforts to basically achieve socialist modernization. Central enterprises must unify their thoughts and actions with the Party Central Committee's scientific judgment and decision-making arrangements regarding the situation, further clarify their positions, accurately find their roles, and effectively shoulder their responsibilities and missions. They should provide strong support in promoting major infrastructure construction, accelerate the updating and digital transformation of traditional infrastructure, and moderately advance new infrastructure construction. They should play a leading role in achieving self-control of the industrial and supply chains, develop emerging industries and future industries in conjunction with their main responsibilities, ensure energy and resource supply, and enhance the resilience of the industrial chain.

[15] From December 25 to 26, the National Industrial and Information Technology Work Conference was held in Beijing. The conference pointed out the need to cultivate and grow emerging industries and future industries. It aims to create emerging pillar industries such as integrated circuits, new displays, new materials, aerospace, low-altitude economy, and biomedicine. Support for breakthroughs in artificial intelligence was emphasized. The orderly development of commercial trials for new businesses such as satellite Internet of Things was encouraged. The first batch of national emerging industry development demonstration bases will be created, and a number of innovative industrial clusters will be built. Key sub-track innovation tasks for future industries will be launched, and innovation development policies for embodied intelligence and the metaverse will be improved. Strengthening 6G technology research and development is also a priority.

[16] On December 24, the Beijing Municipal Commission of Housing and Urban-Rural Development and four other departments jointly issued a notice on further optimizing and adjusting the city's real estate-related policies, effective immediately. The notice clarifies that the conditions for non-Beijing households to purchase homes will be relaxed, reducing the social security or individual income tax payment period for purchasing commercial housing within the Fifth Ring Road from the current "3 years" to "2 years"; for purchasing commercial housing outside the Fifth Ring Road, it will be reduced from the current "2 years" to "1 year." In addition, families with two or more children can purchase one additional set of commercial housing within the Fifth Ring Road. Interest rate pricing will no longer differentiate between first and second homes Risk Warning: The construction of high-frequency prediction models is based on historical data and may not exhibit strong out-of-sample excess effects during significant future economic shocks or market changes; such as the escalation of geopolitical tensions in the Middle East and short-term unexpected pressures in the domestic real estate market.

Source: Guo Lei Macro Tea Room

Risk Warning and Disclaimer

The market carries risks, and investment should be approached with caution. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investment based on this is at one's own risk