摩根士丹利-中国思考：托底而非根治-China Musings Asia Pacific：A Floor,Not a Fix-20261012

【价估日录】网整理，

RESEARCH

MorganStanley

October12,202608:45AMGMT

ChinaMusings|AsiaPacific

AFloor,NotaFix

Beijing'stargetedpackagefor"SixNetworks"financingoffersamodest4Qgrowthcushionbutlikelywon'tbreakthe

deleveragingtrap.Strongexportsletpolicymakersdefendthegrowthfloorwithoutademand-sidepivot,whilelocaldebt,

housingandweakconsumerconfidenceshoulddraginto2027.

KeyTakeaways

Sep-Octeasingshouldsupport4Q26GDPof4.4-4.5%Y,vs.3Q's~4.3%,ledbynarrowerinfrastructureFAlcontraction.

■Theinfrastructureprojectpipelineiskeytopolicytransmission.Weseepotentialapprovalsformoreoffshorewind.

■Themortgagesubsidy'snarroweligibilityLimitstheboosttosalesand

transmissiontonewstarts.FurthereasingcouldincludeaHPFLoanratecut.

■Despitecurrentpolicyfine-tuning,householddeleveragingandasizablereductionindebt-swapreliefcouldreignitegrowthpressuresin2027.

■Robustexportsnowallowrapidadjustmentsindebt-ladensectors;aslowdowncouldraiseurgencyforfiscal,debtresolutionandsocial-welfarereforms.

Themarketbroadlyexpectsonlymodesteasingfortheremainderof2026,despite

sizableunusedpolicy-financialtools,andisincreasinglylookaheadto2027.Welayoutaframeworkfortrackinginfrastructurefinancingtransmission.Wealsoassessoffshorewindasapotentialsourceofnewinfrastructureprojectsandwhymortgagesubsidiesmighthavelimitedinvestmentspillovers.Finally,wediscusspotentialpolicycatalystsseenfor2027amidgrowingconcernsoverChina-EUtradetensions.

IDEA

MORGANSTANLEYASIALIMITED+RobinXing

ChiefChinaEoonomist

+8522848-6511

RobinXing@morganstanley.oom

EvaHouEquityAnalyst

+8522848-6964

+8523963-0385

+8523963-4015

EvaHou@

StephenCheung,CFAEquityAnalyst

StephenCheung@morganstanleycomJennyZheng,CFA

Economist

Jemny.LZheng@morganstanley.oomZhipengCai

Economist

+8522239-7820

+8522239-7229

ZhipengCai@HarryZhao

Economist

HarryZhao@

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companiescoveredinMorganStanleyResearch.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofMorganStanley

Research.InvestorsshouldconsiderMorganStanley

Researchasonlyasinglefactorinmakingtheirinvestmenttdecision.

Foranalystcertificationandotherimportantdisclosures,refertotheDisclosureSection,locatedattheendofthisreport.

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2

Idea

Economics

Fine-tuning,notpivot

Whynow?Growthistestingtheannualtarget

Growthlikelyslowedtowardthelowerendofthe4.5–5.0%targetrangeinthefirstthreequarters.RealGDPgrowthdeceleratedto4.3%YoYin2Q26,andweestimatea

similarpacein3Q26,withfurtherweakeninginsequentialmomentumledbyservices.

Domesticdemandremainsunderpressurefromacceleratinghouseholddeleveraging,

weakeninginvestmentandsluggishfiscalexecution.Householdsareprioritizingdebt

repaymentandprecautionarysavingsoverconsumption,whilethepropertydownturnandconstrainedlocal-governmentfinancescontinuetoweighoninvestment.Meanwhile,theheightenedemphasisonlocaldebtresolutionhascontributedtoslowfiscalandquasi-

fiscaldeployment,reinforcingratherthanoffsettingtheweaknessinprivatedemand.

Targetedeasingshouldsupportamodestgrowthreboundin4Q26.TheRmb250bn

additionalspecial-bondallocation,fasterdeploymentpolicy-bankingtools,cheaperPSLfunding,andnewprojectapprovalsshouldprovidesomesupporttoinfrastructure

investment.WeexpectmonthlyinfrastructureFAIgrowthtoreboundmodestlyonaYoYbasisin4Q(vs.-14%Yin3Q26),helpingstabilizecumulativeYTDgrowth.HeadlineTSFYoYmightstabilizetowardyear-endwithsomecrowd-inofcorporatemedium/long-termlending.Overall,weexpectrealGDPgrowthtorecovermodestlyfrom4.3%YoYin3Qtoaround4.4-4.5%Yin4Q26,andmaintainfull-yeargrowthat~4.5%.

Sep-Oct2026PolicyFine-tuningataGlance

EasingTypeActualMeasureOurTake

Quasi-fiscal

25bpPSLratecutto1.5%,witheligibilityexpandedtothesixnetworks.

Marginalfundingreliefforpolicybanks.Cheaperfinancing

supportsstrategicinfrastructure,butviableprojectsremainthekeyconstraint.

Quasi-fiscal

Rmb700bnPBoCre-lendingquotaincrease,

includingRmb200bnfortechnology/equipment

andRmb500bnforagriculture/SMEs.Fundingratiofortechnology/equipmentraisedfrom60%to

100%.

Targetedcreditsupport.Improvesbanks'incentivestofinanceprioritysectors,butunlikelytogeneratebroadcreditexpansion.

Quasi-fiscal

AcceleratedimplementationofthepreviouslyannouncedRmb800bnpolicy-bankingtoolsforinfrastructure.

Implementationwilllikelyspeedupamidsynergiesfrom

incrementaleasingelsewhere,suchasPSLratecutand

eligibilityexpansion,and/ormoreprojectapprovals(suchasoffshorewindpower).

Housing

Firstcentrallyfundedmortgagesubsidy,withanestimatedfiscalcostofRmb15–20bn/year.

Signalingeffectoutweighsstimulus.Themovedemonstrateswillingnesstodeploycentralfiscalresourcestosupport

householdbalancesheets,butthecurrentdesignpointstolimitedimpactonthehousingmarket.

Idea

FiscalPreviouslyunusedstatutorydebtheadroom

activated:Rmb300bninadditionalgeneralbondstosupportcounty-levelfiscalcapacity;Rmb250bninspecialbondsforinfrastructureinvestment,

prioritizingongoingprojectsandthesixnetworks.

Atangiblefiscalcushion,echoingrecentStateCouncildirectiveto"makeeffectiveuseofunusedlocal-governmentdebtquota."Comparedwith2025,theexpansionisslightlylarger(by

Rmb50bn),whilemoreflexibilityisgrantedtolocalgovernmentsthisyear:unlikelastyear,theusageofRmb300bningeneral

bondquotawasnotrestrictedtodebtresolution.

Whynotmore?Exportresilienceandatech-firstpolicyframework

Beijingremainscommittedtoshiftingtowardatech-firstgrowthmodel.Since2021,

policymakershavebeenactivelysteeringtheeconomyawayfromproperty-anddebt-

drivenexpansiontowardtechnologicalself-reliance,advancedmanufacturingandenergysecurity.The15thFive-YearPlanreinforcesthesepriorities.Meanwhile,theeconomy's

resiliencetoUStariffsandtheenergyshockappearstohavestrengthenedBeijing's

convictioninthispolicydirection,reducingtheperceivedurgencyforbroaddemand

stimulus.Althoughtheplanalsoemphasizesraisingconsumption'sshareofGDP,the

separate2030retail-salestargetimpliesjust3.7%annualgrowth,broadlyinlinewiththerecenttrend.Inourview,Beijingcontinuestoseeconsumptionrebalancingasagradualoutcomeofindustrialupgradingandemploymentgrowth,ratherthananear-termprioritywarrantinglarge-scalefiscaltransferstohouseholds.

ExportresiliencegivesBeijinggreaterroomtotolerateslowergrowthintraditionalsectors.RecentcommunicationsfromBeijingcharacterized1H26's4.7%GDPgrowthas

broadlyconsistentwithChina'spotentialandexplicitlyacknowledgedthenear-term

growthcostsofresolvingpropertyandlocal-governmentdebtrisks(seeChinaMusings:A2021DejaVu?DifferentTightening,SameDeflationaryPressure,3Sep2026).Meanwhile,China'sexposuretotheglobalAIcapexboomandbroaderAsianindustrialinvestment

cyclecontinuestounderpinexportsandheadlinegrowth.Thisexternalstrengthreducestheurgencytooffsetweaknessinproperty,constructionandothertraditionalsectorsthroughbroadstimulus.However,theincreasinglycapital-intensivenatureofexport

growthlimitsspilloverstoemploymentandhouseholdincome,allowingthetwo-speedeconomytopersist:moderateheadlinegrowthalongsideweakdomesticdemand.

ComparingSep-2024PolicyPivotand2026PolicyFine-tuning

9.242024Pivot

OngoingFine-tuning

Trigger

Growthmissedtheannualtargetfortwoconsecutivequarters,leavingYTDgrowthbelowtarget.

Deflationpressuresbecamepervasive.

Localfinancingstressleadingtorevenue-drivenenforcement.

Growthwilllikelymisstheannualtargetfortwoconsecutive

quarters,butYTDgrowthshouldhoveraroundthelowerendoftheannualtargetrange.

Inflationheadlineshaveimprovedamidimportedinflationpressures,thoughunderlyingmomentumremainssubdued.

Objective

Re-accelerategrowth.

Resetexpectationsandimproveconfidence.

Defendthegrowthfloor.

Breadth

Coordinatedmonetary,property,fiscalandcapital-marketmeasures.

Moretargeted:infrastructure,selectedcreditchannelsandmortgagesubsidy.

Fiscalimpulse

Meaningful;augmentedfiscaldeficitwidenedby~3ppofGDPfromAug-24tomid-2025.

Modest:augmentedfiscaldeficitcouldstabilizeandreboundby0.5-1ppofGDPtowardend-2026.

MorganStanleyResearch3

4

Idea

MonetarypolicyBroadeasing:20bppolicyratescut,50bpRRRcut,~50bpTargeted:25bpPSLratecut;largerrelendingquotasontechand

cutonexistingmortgagerate.SMEs.

PolicysignalClearpivot:Beijingwasnolongerwillingtotoleratea

downwardspiralingrowth,inflation,confidenceandassetprices.

Beijingiswillingtocushiontheslowdown,butismoretolerantofdeleveragingandactivitysoftnessincertainsectors.

Ispolicytransmitting?Keysignposts

TheSeptemberfine-tuningshouldhelpcushioninvestment.Weseeathree-stage

transmissionmechanism:policy-bankingtoolsclosetheproject-capitalgap;PSLandbanklendingprovidecomplementaryfinancing;actualprojectexecutiontranslatesfundingintofixed-assetinvestment(FAI).Thefirststageisnowunderway,butevidenceofthesecondandthirdstagesremainslimitedsofar.Weexpectmorevisible,albeitmodest,

improvementinFAIYoYgrowthin4Q26,partlyonalowbase,concentratedinstrategicinfrastructureandindustrialupgradingratherthanabroad-basedinvestmentrebound.

Howdoesthefinancingreachtherealeconomy?

Policy-financialtoolsaddresstheseedcapitalconstraint.TheRmb800bnprogramfor2026,upfromRmb500bnin2025,isprimarilydesignedtosupplementprojectcapital.Policy-bankfundscaninvestdirectlyasequityorextendshareholderloansthrough

entrusted-loanarrangements.

PSLcomplementsproject-capitalfinancing.ThePBoCsuppliesrelativelylow-cost

fundingtopolicybanks,supportingboththeimplementationofpolicy-financialtoolsandassociatedprojectlending.Thelatest25bpPSLratecutto1.5%,alongsideexpanded

eligibilityforthesixnetworks,couldthereforefacilitatebothcapitaldeploymentandsubsequentinvestmentfinancing.

Re-lendingsupportsaseparate,commercial-bankchannel.TheSeptemberpackage

expandedtechnology/equipmentre-lendingbyRmb200bnandagriculture/SMEre-lendingbyRmb500bn.PBoCalsoraisedtherefinancingratiofortechnology/equipmentloans

from60%to100%.Theseshouldimprovecommercialcreditsupplyintargetedareas.

The2022precedent:Clearpolicytransmission

Thecapital-deploymentchannelworkedquickly.NDRCdisclosedthatthe2022policy-financialtoolsdisbursedRmb739.9bn,supportingmorethan2,700projects.Thefirst

Rmb300bnhadbeendeployedbyend-August,withadditionaltranchesfollowing.Entrusted-loanflowsjumpedtoRmb176bninAugustandRmb151bninSeptember,significantlyhigherthanthepre-policytrend.

Second-stagefinancingimpulsefollowed.Corporatemedium/long-termlending

strengthenedfrom11.9%YinJuly2022andpeakedat18.2%YinMay2023.PSLrecordedRmb630bnofnetinjectionsduringSeptember–November2022.

Quasi-fiscaltoolsdeliveredaclearinfrastructureinvestmentboost.InfrastructureFAIacceleratedfrom9%YoYin1H22to13%in2H22,andremainedelevatedat10%in1H23.Thepickupwasledbyutilities(16%inJulyto34%inSeptember)andtransportation(2%to13%),consistentwiththetools’focusonenergyandtransportprojects.Water

conservancy/environment/publicfacilitieslagged,aszero-COVIDdisruptionsandstrained

MorganStanleyResearch5

Idea

local-governmentrevenuesconstrainedprojectexecution.Overall,the2022experiencedemonstrateseffectivetransmissionfromquasi-fiscalfinancingtoinfrastructure

investment.

Exhibit1:During2H22infrastructurepush,therewasstrongproject-levelcapitalinjectionsinitially…

RmbbnPolicyBankingTool:2022disbursementspike

200

150

100

50

2021entrusted-loanflow

2022entrusted-loanflow

-

(50)

(100)

JanFebMarAprMayJunJulAugSepOctNovDec

Source:CEIC,MorganStanleyResearch

Exhibit2:…followedbystrongerloandemand

RmbbnMedium-toLong-termCorporateLoans:2H22acceleration

2,500

2,000

1,500

1,000

500

-

Higherhighs,lowerlowsHigherhighs,higherlows

JunJulAugSepOct2022corporateMLTloanflow

NovDec

JanFebMarAprMay2021corporateMLTloanflow

Source:CEIC,MorganStanleyResearch

The2026rollout:modestcapitaldeploymenthasbegun

Initialsignsofcapitaldeployment-sizenotyetcomparablewith2022.Thethree

policybanksreportedmorethanRmb100bnofnewpolicy-financial-tooldisbursementssinceSeptember,supportingaround400projects.Thisisawelcomeoperationalstep-upafterslowdeploymentYTD.EntrustedloansincreasedonlyRmb23bninAugust

(Rmb176bninAugust2022),thoughSeptemberdata(tobereleasednextweek)couldbemoreinformative.

Theprojectmixgearedistowardsemergingsectors.CDBdisclosedthatofthe

Rmb61bnSeptemberdeployments,74.5%wenttowardartificialintelligence,digital

economy,biomedicine,consumptionandgreen/low-carbonprojects.Thisdiffersfromthemoreconventionalinfrastructureemphasisin2022.Itsuggeststhatevensuccessful

implementationmayshowupmoreinmanufacturingcapexratherthantraditionaltransportationormunicipal-investmentseries.

CanPSLandrelendingeasethetransmissionbottleneck?

ThePSLratecutshouldprovideamarginalboost,butisunlikelytobepivotal:The

25bpPSLratecutandexpandedeligibilityforthe"sixnetworks"shouldcomplementtheRmb800bnquasi-fiscaltoolsbyloweringpolicy-bankfundingcosts.However,historicalexperiencesuggestsPSLusageisdrivenmorebyprojectavailabilitythanfundingcosts:despiteJanuary'sratecut,PSLremainedlargelyonadownwardtrajectoryuptoAugust.Thelatesteasingmayfacilitatefinancingforviableinfrastructureprojects,butisunlikelytounlockameaningfulinvestmentimpulsewithoutastrongerpipelineofviableprojects.

Re-lendingprovidestargetedcreditsupport,withatilttowardtechnology.ThePBoCexpandedrelendingquotasbyRmb700bn,includingRmb200bnfortechnology

innovationandequipmentupgrades,whileraisingthefundingratioforthelatterfrom

60%to100%.Thismateriallystrengthensbanks'incentivestolendtoprioritytechnologysegments.Historicalexperiencesuggeststhatquotaexpansionshavegeneratedunevenandoftendelayedtake-ups,particularlywhencreditdemandisweak.Thelatestmeasures

6

Idea

shouldhelpsustaintech-relatedlendingandcapex,butappearunlikelytogenerateabroad-basedcreditimpulse.

Exhibit3:Project-levelcapitalinjectionappearsquitemodestsofar

RMBbnEntrustedLoans:2025vs.2026YTD

200

150

100

50

-

(50)

(100)

DeploymentofRmb500bnin

2025flow

2026YTDflow

policybankingtoolsin2025

????

End-JulyPolitburomeetingcalledfor

fasterimplementation

ofsixnetworks"

JanFebMarAprMayJunJulAugSepOctNovDec

Source:CEIC,MorganStanleyResearch

Exhibit4:progress

PSLprovidesanadditionalgaugeofimplementationforthe“sixnetworks”

PBoCPSLOutstanding

Rmbbn4,000

3,000

2,000

1,000

0

2H22

infrastructurepush

Jan-21

May-21

Sep-21

Jan-22

May-22

Sep-22

Jan-23

May-23

Sep-23

Jan-24

May-24

Sep-24

Jan-25

May-25

Sep-25

Jan-26

May-26

Sep-26

Early2026:PSLrate

cutandpolicyintentto"starttheyear

strong"

late2023–early2024:Three

MajorProjects:affordable

housing,urban-village

redevelopment,anddual-use

infrastructure.Sep-26:funding

eligibilityexpandedto"sixnetworks"

Source:CEIC,MorganStanleyResearch

Whatwouldconfirmthatpolicyistransmitting?

•Capitalfundingdeployment:Officialdisbursementsofpolicy-financialtools,TSFentrustedloans,policy-bankbondissuanceandnetPSLinjectionstotrackwhetherannouncedfundingisreachingprojects.

•Creditcrowd-in:Corporatemedium/long-termloans,policy-banklendingandmatchingcommercial-bankloanstoassesswhetherproject-capitalinjectionsaremobilizingadditionalcredit.

•Investmentexecution:ProjectstartsandinfrastructureFAI,particularlyinpowergrids,waterinfrastructure,logisticsanddigitalinfrastructure,toassesswhetherfinancingistranslatingintoactualinvestment.

Aglimpseinto2027

Investorsareincreasinglylookingbeyondtherecentfine-tuningtoBeijing'spolicystancein2027.Inourclientconversations,acommonviewisthattheSeptember–October

measuresareinsufficienttoreversethedomesticslowdown,yetexpectationsfor

substantialadditionalstimulusbeforeyear-endremainlimited.ThedebateisthereforeshiftingtowardwhetherBeijingwillrecalibrateitsfiscalstanceandpolicymixin2027,particularlyasexistingdebt-reliefmeasurestaperandthesustainabilityofexport-ledgrowthfacesgreaterscrutiny.

Absentadeeperoverhaulofpolicymix,fine-tuningdoesnotreversethebroadertightening

Severaltighteningforcesremainintact.Tightertaxandsocial-securitycontribution

enforcementcanincreasetheeffectiveburdenonbusinessesandhouseholdswhen

privatedemandisstillweak.Weestimatethattighterenforcementcouldamountto1-2%ofGDPineffectivetaxburden,annualized.Meanwhile,fallingland-salerevenues-withafurthermeaningfulcontractionover2027-28-shouldcontinuetoconstrainlocal-

MorganStanleyResearch7

Idea

governmentspending,whilehouseholddebtrepaymentandprecautionarysavingsuppressconsumption.

Thenextpressurepointis2027local-governmentfinancing.Thefive-yearRmb10trndebt-swapprogramisheavilyfront-loaded,withRmb2.8trnannuallyin2024–26,fallingtojustRmb800bnperyearin2027–28.ThisRmb2trnannualreductioninrefinancing

reliefcouldrenewpressureonlocal-governmentliquidity,constrainarrearssettlementandfurtherweighonfiscalspendingamidpersistentlyweakland-salerevenues.Althoughthestep-downdoesnotrepresentadirectcutingovernmentexpenditure,itrisks

exacerbatingpro-cyclicalfiscaltighteningjustasdomesticdemandremainsfragile.

Exportsanddomesticreforms:Aseesaw

China'spost-housingtransitionhasincreasinglyvisibleglobalspillovers,triggeringreactionsbymajortradingpartners.Asthepropertydownturnweighsondomesticdemand,manufacturingupgradingandcapacityexpansionhavedrivengainsinexportcompetitivenessandmarketshare.However,thewideninggapbetweendomestic

absorptionandindustrialsupplyhasalsocontributedtoalargerexternalsurplus,intensifyingcompetitivepressuresontradingpartners.Specifically,theEUhas

increasinglycalledforarebalancingoftradewithChina.

EvennegotiatedadjustmenttotraderelationscouldstillmeanheadwindsonChinaexports.Forexample,accordingtoa9Oct2026reportfromTheGuardian,the

preliminaryunderstandingonhybridvehiclesoffersEuropeawaytomoderateimport

competitionwhileitsautoindustryrestructures,andgivesChinaapathtopreserve

marketaccesswithouttriggeringabroadertariff-retaliationcycle.Yet,avoidingescalationmaystillentailconcessions:EUofficialssuggestedthatChinesehybridandplug-inhybridexportscouldbeover50%belowtheprojectedno-policy-changetrajectoryoverfour

years,althoughthefinaltermsremainunsettled.Ifimplemented,suchrestrictionscouldconstrainChina'sautoexportgrowth.Moreimportantly,itmayestablishaprecedentforaddressingtradeimbalancesinotherindustries-includingintermediateinputs,capitalgoods,andpharmaceutical-asChina'sglobalmanufacturingfootprintexpands.

Risingconstraintsonexportscouldstrengthenthecasefordomesticreforms.ExportresiliencehasgivenBeijingroomtomaintainitstech-firstpolicyframeworkdespiteweakdomesticdemand.Butifexternaldemandslows,thepressuretoliftdomesticgrowth

couldincrease.Inthatscenario,thoughwerecognizethatBeijingmayhavebecomemorecautiousinusingone-offstimulustosupportgrowth,progressonkeystructurereformscouldincrease.WebelievethefollowingreformswouldberequiredforChinatoreflateinasustainablemanner:

•Debtresolution:UseofcentralgovernmentdeficitorPBoCcredittoolsto

acceleratearrearsclearanceandpursueamorecomprehensiverestructuringofLGFVliabilities.

•Fiscalreform:Rebalancerevenue-sharingandexpenditurebetweencentralandlocal,andreducelocalgovernments'dependenceonlandsalesand

production-orientedtaxincentives.

•Socialwelfareandhouseholdincome:Expandpension,healthcare,

unemploymentandchildcaresupport,alongsidehukou-relatedpublic-servicereform,tolowerprecautionarysavingsandsupportconsumption.

8

Idea

ChinaOffshoreWindEntersaDeep&Far-OffshoreDevelopmentCycle

EvaHou

Chinaaimstopromotethestandardizedandorderlydevelopmentofoffshorewindpower,accordingtothe15thFive-YearRenewableEnergyPlan.ThePlanmarksastrategicshiftinoffshorewinddevelopmentfrompredominantlynearshore,project-by-project

developmenttowardlarge-scaledeepandfar-offshorewindbases.Thegovernmenttargets~100GWofnewoffshorewindconstructionstartsduring2026–30,with

cumulativeinstalledcapacityexceeding100GWby2030.Asend-2025,China'soperationaloffshorewindinstalledcapacitywas47GW.

•Nearshoreremainsimportant,butdeepandfar-offshorewilllikelybecomethenextgrowthpillar:Thegovernmenttargetsacceleratingconstructionofprovincialoffshorewindpowerprojectsthathavealreadyreceivedapproval,andcarryingoutanewroundofrevisionsandassessmentsofprovincialoffshorewindpowerplans.

•Developmentmodelshiftsfromindividualprojectstowardlarge-scaleoffshorewindbases:ThePlancallsforanationalpipelineofdeepandfar-offshorewind

basesacrosstheBohaiSea,YellowSea,EastChinaSeaandSouthChinaSea.

•Gridconnectionbecomesincreasinglycentralizedandshared:Italsoemphasizescoordinatedgenerationandtransmissionplanning,sharedsubseatransmission

corridorsandlandfallinfrastructure,aswellasthelonger-termdevelopmentofintegratedoffshoreenergyhubsandenergyislands.

China’soffshorewindmarkettoenterastronger

constructioncyclefrom2027

Offshorewindconstructionactivityremainedrelativelysubduedfortheninemonths

endedSeptember2026,withonly2-3GWofnewprojectscommencingconstruction,

mainlyincluding1.2GWinGuangdong,0.3GWinJiangsuand1.2GWinHainan.Onekey

factorwasthedelayintheDeepandFar-OffshoreWindDevelopmentActionPlan,whichhadinitiallybeenexpectedtobereleasedalongsidethe15thFive-YearRenewableEnergyDevelopmentPlaninMarch2026.Thedelayedrolloutoftheactionplanhasslowedtheapprovalandconstructionscheduleforanumberofdeepandfar-offshoreprojects.Weexpectprojectapprovalsandconstructionstartstoacceleratemeaningfullythereafter,oncetheActionPlanisreleased,potentiallyin4Q26.

TheDeepandFar-OffshoreWindDevelopmentActionPlan,whichhasbeenunder

preparationformorethantwoyears,isexpectedtoestablishaclearerdevelopmentandapprovalframeworkforprojectsincentrallyadministeredwaters,addressingkey

bottlenecksincludingsea-userights,projectapprovals,militaryclearanceandcross-agencycoordination.

Weestimateannualnewconstructionstartscouldexceed20GWduring2027–30,a

substantialincreasefrom5-8GWp.a.during2022-25,supportedbytherolloutofdeepandfar-offshorewindbasesaswellasanewwaveofprovincialoffshorewindprojects.

MorganStanleyResearch9

Idea

Thiswouldimplymorethan100GWofcumulativenewoffshorewindconstructionstartsduringthe15thFive-YearPlanperiod,broadlyconsistentwiththenationaltargetof

approximately100GWofnewoffshorewindprojectscommencingconstructionduring2026–30.

WeforecastChina'soffshorewindinstallationwillincreaseto15GW/20GW/25GWin2028/29/30,respectively,from9GW/9GWin2026/27,benefitingfromaccelerationofapprovalandconstructionoflarge-scaledeepandfar-offshorewindbases.Ournewinstallationforecastsfor2026and2027arebasedontheunder-constructionprojectpipeline.

Exhibit5:China'soffshorewindnewinstallationforecasts,2026-30E

China'snewoffshorewindinstallation(GW)

25

20

15

10

5

0

25

20

17

15

99

7

7

44

4

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026E

2027E

2028E

2029E

2030E

2

Source:NEA,MorganStanleyResearch;E=MorganStanleyResearchestimates

Deepandfar-offshorewindinv