摩根士丹利-中国股票策略：在宏观不确定性中发掘微观阿尔法-China Equity Strategy：Discovering Micro Alpha Amid Macro Uncertainty-20260330

Morganstanley

RESEARCHFouNDATloN

March30,202610:04PMGMT

InvestorPresentation|AsiaPacific

ChinaEquityStrategy:DiscoveringMicroAlphaAmidMacroUncertainty

MoRGANSTANLEyAsiALimiTEd+

LauraWang

EquityStrategist

Laura.Wang@

+8522848-6853

MoRGANSTANLEyAsiA(SiNGApoRE)PTE.+JonathanFGarner

EquityStrategist

Jonathan.Garner@

+656834-8172

MoRGANSTANLEyAsiALimiTEd+

ChloeLiu

EquityStrategist

Chloe.Liu1@

+8522848-5497

VickyWu

EquityStrategist

Vicky.Wu@

+8523963-3928

MorganStanleydoesandseekstodobusinesswith

companiescoveredinMorganStanleyResearch.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofMorganStanley

Research.InvestorsshouldconsiderMorganStanley

Researchasonlyasinglefactorinmakingtheirinvestmentdecision.

Foranalystcertificationandotherimportantdisclosures,refertotheDisclosureSection,locatedattheendofthisreport.

+=Analystsemployedbynon-U.S.affiliatesarenotregisteredwithFINRA,maynotbeassociatedpersonsofthememberandmaynotbesubjecttoFINRArestrictionson

communicationswithasubjectcompany,publicappearancesandtradingsecuritiesheldbyaresearchanalystaccount.

2

Morganstanley

RESEARCH

FouNDATloN

Morganstanley

March30,2026

ChinaEquityStrategy

DiscoveringMicroAlphaAmidMacroUncertainty

INVESTORPRESENTATION

MORGANSTANLEYRESEARCH

Asia/Pacific

MorganStanleyAsiaLimited+

LauraWang

EquityStrategist

Laura.Wang@

+8522848-6853

ChloeLiu

EquityStrategist

Chloe.Liu1@

+8522848-5497

VickyWu

EquityStrategist

Vicky.Wu@

+8523963-3928

MorganStanleydoesandseekstodobusinesswithcompaniescoveredinMorganStanleyResearch.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofMorganStanleyResearch.InvestorsshouldconsiderMorganStanleyResearchasonlyasinglefactorinmakingtheirinvestmentdecision.

Foranalystcertificationandotherimportantdisclosures,refertotheDisclosureSection,locatedattheendofthisreport.

+=Analystsemployedbynon-U.S.affiliatesarenotregisteredwithFINRA,maynotbeassociatedpersonsofthememberandmaynotbesubjecttoFINRArestrictionsoncommunicationswithasubjectcompany,publicappearancesandtradingsecuritiesheldbyaresearchanalystaccount.

Morganstanley

RESEARCH

FouNDATloN

MoRGANSTANLEyREsEARcH3

MSCIChinahasunderperformedEmergingMarketYTDmainlyduetoAImemorysuper-cycle;Moreresiliencedemonstratedamidlatestoil/geopoliticaluncertainty

160

150

140

130

120

110

100

90

80

70

OW

MSCIChinaRelativetoEM(indextotalreturninUSD)

OW

OW

OW

OW

UW

EW

EW

EW

EW

EW

EW

Dec-12

Jun-13

Dec-13

Jun-14

Dec-14

Jun-15

Dec-15

Jun-16

Dec-16

Jun-17

Dec-17

Jun-18

Dec-18

Jun-19

Dec-19

Jun-20

Dec-20

Jun-21

Dec-21

Jun-22

Dec-22

Jun-23

Dec-23

Jun-24

Dec-24

Jun-25

Dec-25

Jun-26

Source:MSCI,FactSet,DataStream,MorganStanleyResearch.DataasofMar27,2026.Pastperformanceisnoguaranteeoffutureresults.

4

IndexperformanceandSharpeRatio(MSCIChina,CSI300,MSCIEM,S&P500)–Chinaequitymarketperformanceandrisk/rewardprofilehaveimprovedsinceSep-24,withpullbackYTD

Source:Datastream,Bloomberg,MorganStanleyResearch.

Note:DataasofMarch27,2026.Pastperformanceisnoguaranteeoffutureresults.Resultsdonotincludetransactioncosts/fees.10-yearChinesegovernmentbondyieldisusedinCSI300relatedcalculations,comparedtoUStreasury10-yearyieldforothercases.

MoRGANSTANLEyREsEARcH5

Asia/EM/ChinaDecember2026indextargets–WiderangeacrossBull/base/bearcases

Source:MSCI,IBES,Bloomberg,FactSet,RIMES,MorganStanleyResearchestimates.Note:DataasofMarch27,2026.

6

MorganStanleybull/base/bearcaseindextargethistoryforMSCIChinaandtheHangSengIndex

MStargetpricehistoryforHangSeng

MStargetpricehistoryforMSCIChina

43,000

40,000

37,000

34,000

31,000

28,000

25,000

22,000

19,000

16,000

13,000

10,000

BearCaseBullCaseBaseCaseHangSengIndex

Dec-13

Jun-14

Dec-14

Jun-15

Dec-15

Jun-16

Dec-16

Jun-17

Dec-17

Jun-18

Dec-18

Jun-19

Dec-19

Jun-20

Dec-20

Jun-21

Dec-21

Jun-22

Dec-22

Jun-23

Dec-23

Jun-24

Dec-24

Jun-25

Dec-25

Jun-26

180

160

140

120

100

80

60

40

20

BearBullBaseMSCIChinaIndex

Dec-13

Jun-14

Dec-14

Jun-15

Dec-15

Jun-16

Dec-16

Jun-17

Dec-17

Jun-18

Dec-18

Jun-19

Dec-19

Jun-20

Dec-20

Jun-21

Dec-21

Jun-22

Dec-22

Jun-23

Dec-23

Jun-24

Dec-24

Jun-25

Dec-25

Jun-26

Source:RIMES,FactSet,MorganStanleyResearchforecasts.Note:WeeklypriceindexdataasofMarch27,2026.

MoRGANSTANLEyREsEARcH7

AssessingMorganStanley’sChinaframework–2026underpinnedbyglobalgeopoliticaluncertainty;Stabilityisthekey

2025

MidYear

2025

YearEnd

2018

2H2021

Aug-23

Feb-25

Dec-22

2020PostCovid-19

x

x

x

x

x

x

x

x

x

xx

xx

Neutral

Neutral

1Economic/EarningsEstimates

x

x

x

Neutral

Neutral

Neutral

Neutral

2Valuation

x

3Liquidity

Globaldemand

uncertaintyandcost

spiketriggeredbyoil

crisissuggestmoretop

lineandbottom-linerisk

in2026

x

x

4PolicyCycle

Neutral/Slightlynegative

Neutral/Slightlynegative

x

Neutral/

Slightly

negative

xx

xx

x

x

Neutral

5USDCNYtrend

Neutral/Slightlynegative

x

Interim

truce

6US/China&geopoliticaltension

Neutral

7Regulatory/Policypriority

Downgrade

Upgrade

Downgrade

Upgrade

Downgrade

Upgrade

PTincrease

PTincrease

Source:MorganStanleyResearch.Note:Tickindicatesourviewonthefactorisimproving,whilexindicatesthefactorisdeteriorating,andxxindicatesagreaterlevelofdeterioration.

8

2026–Ayeartostriveforstabilizationandsustainability

2025’spositivedevelopmentsledtomajorrerating…

•MSCIChina’sROEeffectivelytroughedin2024andbackonanupwardtrend.

•Regulatoryshiftfromrectificationtorevitalization–moresupportivefortheprivatesector.

•China’sR&DandinnovationinAIcompetition,robotics,biotechetc.,despitecostandequipmenthurdles.

•Incrementaltop-downeffortstorebalancetheeconomysuchasAnti-involutioninitiatives.

•US/Chinatradenegotiationreachedaninterimtruceandhelpedalleviateinvestors’decouplingconcerns.

…while2026isayeartostriveforstabilizationandsustainability

•Corporateearningsqualityandsustainability.

•Persistentdeflationarypressurethrough2026.

•Potentialregulatoryinterventionagainstspeculativeandoverheatingsigns(especiallyintheA-sharemarket).

•Widerrangeofglobalmacroanduncertaintydrivenbydifferentgeopoliticalun-expectancies.

Asaresult…

•Volatilitymayremainhighonaglobalbasisasmultipolarworldentersanuncharteredera.

•Globaldiversificationinflowcouldbecomemoresteadyandconsistent.

MoRGANSTANLEyREsEARcH9

MSCIChina'sROEhistory–Bottomedoutasof2024;Furthergradualrecoveryhingesonsustainedearningsgrowthstabilizationandreacceleration

MSCIChina12mfROE

Overcapacity+PPIDeflation

6.00

2006200720082009201020112012201320142015201620172018201920202021202220232024202520262027

MSCIChinaROEtroughing

Corporate

self-help+

shareholder

return

enhancement

20.00

18.00

16.00

14.00

12.00

10.00

8.00

Lowinflation+

Macro

Headwind

ChinaBoom-era

Source:Bloomberg,MorganStanleyResearch.Note:HistoricaldataareweeklyasofMarch27,2026.

10

Chinahasimplementedasystemicframeworkonindustrialupgradeandinnovation

Source:Governmentwebsite,MorganStanleyResearch.

MoRGANSTANLEyREsEARcH11

EvolutionofrecentFive-YearPlans

Growth:FromQuantitytoQuality

RealGDP

CAGR:7%

CAGR:>6.5%

SpecificTargetDropped

CoreDriver:TechnologyInnovation

R&D

SpendingCAGR:12%CAGR:10.3%CAGR:>7.0%CAGR:>7.0%

Sustainability:GreenTransition

CO2

Emissions/GDP

CumulativeDecline:

17%

CumulativeDecline:

18%

CumulativeDecline:

18%

CumulativeDecline:

17%

2016-2020

2021-2025

2026-2030

2011-2015

Source:NPC,MorganStanleyResearch.

12

Chinaisbetterpositionedinthecurrentglobaloilshockwithhigherstrategicreservesandeffectivedomesticrationingandpolicytoolkit

Source:CEIC,MorganStanleyResearch

MoRGANSTANLEyREsEARcH13

EnergyshockscanhelpaccelerateChina’sGreenTransitionmissiontofurtherensureenergyindependenceandsecurity

GreentransitioninChina’senergymix…

toenhanceresiliencetoexternalshocks

PrimaryEnergyConsumptionStructure

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

OilandGasCoalnon-fossilenergy

45%46%

33%

99%86%

80%70%

27%

60%

56%

59%

China

India

Indonesia

Philippines

Japan

Taiwan

S.Korea

Malaysia

Thailand

HK

Singapore

Source:NationalEnergyAdministration,IEA,MorganStanleyResearchestimates.LHSchart:AligningAIwithGreenEnergyandSmarterGrids(20April2025).

14

Asia/Pacificcommoditytradebalanceas%ofGDP–China'snetoilimportexposureisrelativelyneutralvs.othermarkets

OilCoalGasAgriculturalproductsMetalsandcrudematerials

15.0%

10.0%

5.0%

-"--."-⃞----

0.0%

-5.0%

-10.0%

AsiaAustraliaChinaHongKongIndiaIndonesiaJapanKoreaMalaysiaPhilippinesSingaporeTaiwanThailand

Source:CEIC,MorganStanleyResearch.LatestavailabledataasofDecember2025foralleconomies.

MoRGANSTANLEyREsEARcH15

Persistentgeopoliticaltensionsmayrisksupplydisruptionstoselectsectors,atdifferentlevelswithindifferentmarkets

Asia'simportdependenceonMiddleEast

Estimatedinventorycoverageacrossproducts

Source:MinistryofEnergy,EPPOThailand,ESDM,PPAC,Customs,IEA,StatisticalReviewofWorldEnergy,Bloomberg,Refinitiv,Argus,Reuters,MorganStanleyresearch

estimates.Note:*CrudeoilimportsfromMiddleEastasapercentageofRefiningthroughput.

16

ConsensusearningsestimatesforMSCIChinaandCSI300–YTDMSCIChinaconsensusestimateshavebeenincreasedby1.2pptfor2026and1.8pptfor2027

MSEPSbase-caseforecastsforCSI300

atDec-26andDec-27

MSEPSbase-caseforecastsforMSCIChina

atDec-26andDec-27

450

400

350

300

250

200

MSEPSForecasts

150

2015201620172018201920202021202220232024202520262027

201820192020202120222023202420252026202712mfwd

MS

BullDec27:365

MS

BaseDec27:335

MS

BearDec27:318

CNY500

MS

BullDec27:

MS

BaseDec27:

7.2

MS

BearDec27:

6.4

MSEPSForecasts

20262027

202712mfwd

HKD

11

10

9

8

7

6

5

4

2014

201720182019

20202021

202120222023

20232024

2016

2019

2024

2025

2025

2026

2015

2018

2020

2022

Source:IBES,Datastream,MorganStanleyResearch.Note:WeeklydataasofMarch26,Source:IBES,Datastream,MorganStanleyResearch.Note:WeeklydataasofMarch26,2026.2026.

MoRGANSTANLEyREsEARcH17

MSCIChinaconsensusEPScompositionbyindustrygroup

ConsensusEPSContributionEPSGrowthEPSGrowthContribution

MSCIChina

2025E

2026E

2027E

2025E

2026E

2027E

2025E

2026E

2027E

Automobiles&Components

0.10

0.19

0.27

34%

96%

43%

0.4%

1.4%

1.0%

Banks

1.61

1.61

1.67

2%

0%

4%

0.5%

0.0%

0.9%

CapitalGoods

0.19

0.23

0.26

4%

19%

11%

0.1%

0.5%

0.3%

Commercial&ProfessionalServices

0.00

0.02

0.02

NM

NM

16%

0.0%

0.2%

0.0%

ConsumerDurables&Apparel

0.11

0.12

0.13

25%

13%

11%

0.3%

0.2%

0.2%

ConsumerServices

0.14

0.18

0.30

-50%

25%

68%

-2.4%

0.5%

1.6%

DiversifiedFinancials

0.13

0.16

0.17

7%

20%

11%

0.1%

0.4%

0.2%

Energy

0.22

0.23

0.23

-11%

4%

3%

-0.4%

0.1%

0.1%

ConsumerStaplesDistribution&Retail

0.01

0.01

0.02

23%

10%

19%

0.0%

0.0%

0.0%

FoodBeverage&Tobacco

0.12

0.13

0.15

-6%

9%

12%

-0.1%

0.2%

0.2%

HealthCareEquipment&Services

0.03

0.03

0.03

-14%

0%

10%

-0.1%

0.0%

0.0%

Household&PersonalProducts

0.01

0.01

0.01

12%

17%

9%

0.0%

0.0%

0.0%

Insurance

0.67

0.62

0.66

24%

-8%

7%

2.2%

-0.8%

0.5%

Materials

0.21

0.34

0.38

40%

63%

10%

1.0%

2.0%

0.5%

Media&Entertainment

1.06

1.13

1.26

14%

6%

12%

2.2%

1.0%

1.7%

Pharmaceuticals,Biotechnology&LifeSciences

0.09

0.11

0.15

95%

25%

32%

0.7%

0.3%

0.5%

RealEstate

0.09

0.11

0.12

26%

16%

10%

0.3%

0.2%

0.1%

ConsumerDiscretionaryDistribution&Retail

0.76

1.00

1.26

-23%

31%

27%

-3.7%

3.5%

3.4%

Semiconductors&SemiconductorEquipment

0.00

0.03

0.05

95%

NM

63%

0.3%

0.5%

0.2%

Software&Services

0.00

-0.01

0.00

4%

NM

162%

0.0%

0.0%

0.1%

TechnologyHardware&Equipment

0.18

0.24

0.31

26%

33%

26%

0.6%

0.9%

0.8%

TelecommunicationServices

0.02

0.02

0.02

9%

24%

8%

0.0%

0.1%

0.0%

Transportation

0.10

0.09

0.10

-26%

-3%

8%

-0.6%

0.0%

0.1%

Utilities

0.15

0.15

0.16

8%

-3%

7%

0.2%

-0.1%

0.1%

MSCIChina

6.0

6.7

7.7

2%

13%

15%

2%

13%

15%

Source:IBES,MSCI,FactSet,Datastream,MorganStanleyResearch.Note:DataasMarch26,2026.

18

MSCIChinaindexlevelearningsgrowthforecastsbyindustrybasedonMSbottom-upestimates

Source:FactSet,Datastream,ModelWare,MorganStanleyResearch.Note:DataasofMarch29,2026.*OnlyindexweightofMorganStanleyResearch-coveredstocksthatareMSCIChinaconstituentsarecounted.Henceitmaynotsumto100%duetocoverage.

MoRGANSTANLEyREsEARcH19

MarchNPC–GDPtargettrimmedto4.5-5.0%,flatdeficit,supply-first

NPCtrimmedGDPtargetto4.5-5.0%andkeptfiscal

packageflatamidpragmatism

Flataugmenteddeficit,stillcapex-centric

2025

2026E

RMBBn

%ofGDP

RMBBn

%ofGDP

AugmentedFiscalDeficitAnnouncedinNPC*

14,617

10.4%

15,209

10.4%

BudgetDeficit

5,660

4.0%

5,890

4.0%

CarryoverofFiscalReserves&Fund

1,475

1.1%

2,050

1.4%

Long-termSpecialTreasuryBonds

1,300

0.9%

1,300

0.9%

-Consumergoodstrade-in

300

0.2%

250

0.2%

-Equipmentupgrading

200

0.1%

200

0.1%

-Majorinfrastructureprojects

800

0.6%

800

0.5%

-Unallocatedamount

0

0.0%

50

0.0%

LocalGovt.SpecialBonds

4,900

3.5%

4,400

3.0%

SpecialTreasuryBondsforReplenishingBankCapital

500

0.4%

300

0.2%

NewPolicy-backedfinancingTools

500

0.4%

800

0.5%

SocialSecurityFundBalanc

-1,462

-1.0%

-1,275

-0.9%

LandSales

1,744

1.2%

1,744

1.2%

A2Hfiscaltop-upof0.5%ofGDPlikelyifgrowthtrackstowardsthelowerendofthetargetrange,includingpossiblyserviceconsumptionsupport.

Source:NPC,CEIC,MorganStanleyResearchestimates.

Note:*LFGVfundingandPSLsupportarenotincludedinthiscalculation,asherewefocuson

ChinaAugmentedFiscalDeficitAnnouncedatNPC(%ofGDP)

0%

-1%

Non-capitaldeficitCapitaldeficit

-2%

-3%

-4%

-5%

-6%

-7%

-8%

-9%

201520162017201820192020202120222023202420252026

comparingfiscalpackageannouncedatNPC.

20

MSEconomicsteamforecastsatemporaryexitfromcurrentdeflationduetoinputcostspikefromenergy;however,sustainabilitycouldbepoor

Chinaremainshalfwayinreflationjourney,with

demandthemissingengine

Step2

Cuttingexistingexcesscapacity

(Productioncurbs,

butnotdurable

capacityclosures)

Step3

Boostingfinal

demand

(Stillthemissing

piece)

GDPdeflatorstepsoutofdeflation,butnotoutof

thewoods

Step1

Slowerinvestmentinoversuppliedsectors

(Investmentslowedbutnotaslump)

Source:CEIC,MorganStanleyResearchestimates

MoRGANSTANLEyREsEARcH21

Corporateprofitmarginsinaggregatemaynotbenefitduetodownstreamdemandweakness

Ontheotherhand,downstreamprofitmarginhingesonwhetherinflationisduetocostpushordemandpull

Shiftsinupstreaminflationtendtotranslatedirectlyintochangesinupstreamprofitmargins

Source:CEIC,MorganStanleyResearchestimates

22

Propertymarketprimaryinventorylevelsuggestsatleastanotheryearofdigestion

Monthlyprimaryhousingsales

(thunit)

500

450

400

350

300

250

200

150

100

50

-

100%

80%

60%

40%

20%

0%

-20%-40%-60%

-80%

Salesunit-Total

Salesunity-y-Total

2013-01

2013-08

2014-03

2014-10

2015-05

2015-12

2016-07

2017-02

2017-09

2018-04

2018-11

2019-06

2020-01

2020-08

2021-03

2021-10

2022-05

2022-12

2023-07

2024-02

2024-09

2025-04

2025-11

Source:CREIS,MorganStanleyResearch.Note:Monthlydataasofend-February2026.

Housinginventoryamong70cities

(mnsqm)

600

500

400

300

200

100

-

InventoryGFA-Total

Inventorymonths-Total(RHS)

Averageinventorymonths-Total(RHS)

35

30

25

20

15

10

5

0

2013-01

2013-08

2014-03

2014-10

2015-05

2015-12

2016-07

2017-02

2017-09

2018-04

2018-11

2019-06

2020-01

2020-08

2021-03

2021-10

2022-05

2022-12

2023-07

2024-02

2024-09

2025-04

2025-11

Source:CREIS,MorganStanleyResearch.Note:Monthlydataasofend-February2026.

MoRGANSTANLEyREsEARcH23

Earningsresultsandrevisionmomentumstillunderpressure

HistoryofChineseequitymarketquarterlyearnings

surprisesbynumberofcompanies

-14%

-20%

-16%-19%-21%-18%-17%

-20%-22%-22%-24%-20%

-24%-25%-26%-24%-27%-24%-24%

-29%-30%

20%

10%

0%

-10%-20%-30%-40%

-50%

MSCIChinaMSCIChinaAOnshore

-7%

-9%-10%-12%

-15%

-19%

17%

12%

9%

-2%-4%-3%-5%

-3%

-14%

12%

9%

8%8%

10%

3%

-20%

-25%

-33%

-38%

0%

-7%

-6%

-13%

-34%-33%

5%

3%

-36%

-30%

-14%

-23%

-14%

-9%

2Q2018

3Q2018

4Q2018

1Q2019

2Q2019

3Q2019

4Q2019

1Q2020

2Q2020

3Q2020

4Q2020

1Q2021

2Q2021

3Q2021

4Q2021

1Q2022

2Q2022

3Q2022

4Q2022

1Q2023

2Q2023

3Q2023

4Q2023

1Q2024

2Q2024

3Q2024

4Q2024

1Q2025

2Q2025

3Q2025

Source:MSCI,Bloomberg,RIMES,Factset,MorganStanleyResearch.DataasofNovember28,2025.

12-monthforwardconsensusearningsestimate

revisionbreadth(ERB,3mma)

30%

20%

10%

0%

-10%

-20%

-30%

-40%

2017201820192020202120222023202420252026

S&P500MSCIEuropeMSCIEMMSCIJapanChina

Source:Factset,MorganStanleyResearch.Note:MonthlydataasofFebruary2026.

24

MSCIChinatradesat10.9x12-monthforwardP/E,~8%discountvs.MSCIEM

MSCIChinastilltradesatdiscountstoothermajor

globalequitymarkets

MSCIChinaFwdP/Evs.MSCIEMFwdP/E

8x

6x

1996199820002002200420062008201020122014201620182020202220242026

MSCIChinaTOPIXMSCIEMS&P500MSCIEurope

28x

26x

24x

22x

20x

18x

16x

14x

12x

10x

21.6x

15.9x

15.9x

11.8x

10.9x

MSCIEMFwdP/E

MSCIChinaFwdP/E

5yraverageofMSCIChinaFwdP/E

MSCIChinaP/Epremium/(discount)%toMSCIEM(RHS)

+1SD

-1SD

50%

40%

30%

20%

10%

0%

-10%

-20%

-30%

-40%

20.0x

18.0x

16.0x

14.0x

12.0x

10.0x

8.0x

6.0x

Jan-10

Jul-10

Jan-11

Jul-11

Jan-12

Jul-12

Jan-13

Jul-13

Jan-14

Jul-14

Jan-15

Jul-15

Jan-16

Jul-16

Jan-17

Jul-17

Jan-18

Jul-18

Jan-19

Jul-19

Jan-20

Jul-20

Jan-21

Jul-21

Jan-22

Jul-22

Jan-23

Jul-23

Jan-24

Jul-24

Jan-25

Jul-25

Jan-26

Source:Datastream,MSCI,MorganStanleyResearch.Note:DataasofMarch27,2026.

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MSCIChinavs.USDCNY–CNYstrengththrough1Q26

MSCIChina

CNYperUSD(RHS)

MSCNYForecast(RHS)

7.00

6.956.90

140

120

100

80

60

40

20

0

7.6

7.4

7.2

7.0

6.8

6.6

6.4

6.2

6.0

Dec-11

Dec-12

Dec-13

Dec-14

Dec-15

Dec-16

Dec-17

Dec-18

Dec-19

Dec-20

Dec-21

Dec-22

Dec-23

Dec-24

Dec-25

Dec-26

Source:CEIC,MorganStanleyResearch.DataasofMarch30,2026.MSChinaEconomicsteamexpectsUSDCNYtoreach6.90,6.95and7.00byend-2Q26,3Q36and4Q26.

26

US-Chinarelationshiphitsinterimtrucepost2025confrontation;WeexpectTrump-Ximeetingtokeepthingslargelyontrackwitheithermajorescalationorde-escalationlesslikely

Limitedtruce/cooperationwithsymbolicdeliverablesoneitherside

Outcome:

•ChinacouldagreetoincrementalpurchasesofUScommodities(e.g.soybeans,aircraftandenergy),signalgreateropennesstonon-

advancedUSchips,easeregulatorypressureoncertainUS

companiesoperatinglocallyandoffermoreclarityonfutureexportsofcriticalmaterials.

•USmightoffermodesttariffadjustments,exemptionsordelaysinadditionaltraderestrictions.

Overall,incrementalcommitmentsratherthanstructuralchange

Summitcancelledorpuntedaheadofproposedmeeting

Triggers:

•EscalationinUS-Iranconflict(andChina’spossiblemoreexplicitroleintheconflict).

•DeteriorationinUS-Chinarelations.

Outcome:

•Existingtradetensionsandtechrestrictionspersistorintensify.

•Potentialplannedconcessions(e.g.expandedChinesepurchaseofUSagriculturalproductsorlimitedtariffrelief)wouldlikelybe

deferred.

•Additional(andlikelytargeted)exportcontrolsorinvestmentrestrictionscouldemerge

Moredurablestabilizationofthebilateralagreement

Outcome:

•Large-scaleChinesecommitmentstopurchasingUSagriculturalandenergyproducts.

•Formaltariffrollbacks.

•Reciprocalmarketaccesscommitments,andclearerframeworksaddressinginvestmentscreeningandsupply-chainsecurity.

•Possiblyextendedtofentanylcooperationorfinancialmarketaccess.

•Advancedchiprestrictionsremain,butbothsidesestablishclearerlicensingforlower-endchipsandcommercialsemiequipment.

•StableandpredictablerareearthexportsfromChina

Littlechangetotheexistingrelationship,potentialescalationfollowingthesummit

Outcome:

•Vaguestatementsemphasizingdialoguewithoutsubstance.

•Tariffsandexportcontrolswouldremainlargelyunchanged.

•Renewedtensionsofpolicyescalationmightfollow,particularlyifdomesticpoliticalpressuresorgeopoliticaldevelopmentsbecomealargerfocusoftheadministrationvs.thesenegotiations.

Trump-XiSummitScenarios

Source:MorganStanleyResearch.

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