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China
Intelligence for Better Decision Making
Style Rotation and Sector Revaluation Reshape China’s A-Share Market
Nov. 11, 2025 | Financial SystemChina’s A-share market is shifting away from overseas tech exposure toward domestically anchored industries offering sustainable spending and clearer growth paths.
**Investor focus has rotated from US-dominated computing infrastructure to traditional sectors such as storage, power, manufacturing and comprehensive infrastructure, signaling the early stages of a style rotation.**
Supply-chain bottlenecks that once centered on advanced computing hardware are now easing, and investors are repricing Chinese physical assets based on the country’s durable strengths in power generation, electrical distribution, large-scale manufacturing and integrated infrastructure.
**Meanwhile, China’s massive build-out of capacity for the energy transition has earned global recognition.**
The country leads in constructing new energy systems, delivering low-cost sustainable power and providing reliable, inexpensive electricity that underpins manufacturing upgrades. This industrial advantage extends beyond renewables, fueling a broader diffusion rally across related industries.
**In the short term, market attention centers on power equipment—especially electrical instruments and meters—and on chemical subsectors that supply upstream materials or stand to benefit from expanding new energy tracks.**
Titanium dioxide, organosilicon, coatings and inks, modified plastics and membrane materials all exhibit attractive fundamentals, as evidenced by their stock price correlations with power equipment and their positions in inventory cycles.
**Investors expect the rally to spread along three main paths.**
First, power-equipment manufacturers will continue an internal catch-up cycle. Second, related chemical and industrial sectors will participate in the diffusion rally. Third, energy-intensive downstream industries—such as nonferrous metal smelting, non-metallic mineral product manufacturing, ferrous metal smelting, textiles and papermaking—will gain cost advantages from China’s relative abundance of power resources and benefit from domestic pressures that limit price declines and support margin improvements.
**Looking ahead, power-system assets should continue to revalue in the near term.**
Over the medium term, a recovery in manufacturing activity and growth in real-economy investment could drive electricity consumption to outpace GDP growth, potentially triggering a comprehensive revaluation of China’s physical assets and manufacturing strengths. Sectors to watch include upstream resources (copper, aluminum, lithium, oil, coal), capital goods (construction machinery, power-grid equipment, heavy trucks), defense industries, food and beverage, and aviation—driven by capital repatriation and domestic price stabilization.
Key risks to this outlook include a domestic economic recovery that falls short of expectations, which would undermine improvements in return on capital, and a significant overseas downturn that could disrupt the synchronized global manufacturing recovery and reduce demand for physical assets.
**Between November 3 and November 7, 2025, the A-share market traced a choppy upward trend.**
The All-A Index rose 0.63% and the SSE Composite Index gained just over 1%, while the Beijing Stock Exchange 50 fell 3.79%. Large caps outperformed small caps, led by cyclical and defensive sectors. Power equipment, coal, and oil & petrochemicals posted gains, whereas beauty & personal care, computers, and pharmaceuticals & biotechnology underperformed. Trading activity declined: average daily turnover fell by RMB 313 billion to RMB 2,012.3 billion, and northbound trading volume also decreased. Despite lower turnover, margin trading and securities lending balances ticked up, and valuations climbed—the All-A Index PE (TTM) reached 22.20x near the 89th percentile since 2010, while PB stood at 1.82x near its historical median.
**The technology sector continues to adjust and lacks sustainable momentum amid institutional rebalancing.**
Rapid rotation into hot areas such as power-grid equipment, lithium batteries and chemicals reflects growing confirmation of the anti-involution theme, which seeks to curb disorderly competition and price wars. Third-quarter corporate reports demonstrate resilience, with upward trends in revenue, net profit and return on equity, alongside structural bright spots in ChiNext, TMT and midstream manufacturing. The draft 15th Five-Year Plan emphasizes high-quality development, technological self-reliance and improved macroeconomic governance, lending support to the medium- to long-term outlook for A-shares.
Prolonged US Federal Government Shutdown Deepens Domestic and International Disruptions
Nov. 11, 2025 | Governance & LawThe ongoing US federal government shutdown has halted funding across multiple agencies and strained operations both domestically and overseas.
**As of November 9, 2025, the shutdown entered its 40th day with no resolution in sight.**
The shutdown has halted funding for numerous federal operations, and the Trump administration has ordered agencies to curtail program payments, intensifying administrative and legal pressures on state governments and nonprofit organizations.
**Overseas, delayed wage payments for local civilian staff at US military bases have become acute.**
In Italy, about 2,000 workers at Aviano Air Base and Vicenza Army Base did not receive October salaries, prompting Foreign Minister Antonio Tajani to demand adherence to a bilateral agreement requiring monthly payments under Italian law. Italy employs over 4,000 local staff across five US bases, and union leaders warn of possible strikes if pay remains stalled. Portugal secured a bank loan to advance October wages for more than 360 employees at Lajes Field, while Germany has covered nearly 11,000 salaries on the expectation of later US reimbursement. Spain recently resolved delays for over 1,000 workers through national intervention. The Pentagon insists that local employees continue their duties despite the funding lapse.
**Domestically, the shutdown has severely disrupted the Supplemental Nutrition Assistance Program (SNAP), which delivers over $8 billion each month to 42 million low-income Americans.**
When regular funds ran out at the end of October, the USDA directed states on November 8 to limit November benefits to 65 percent of normal levels and cancel any payments above that threshold under threat of losing federal administrative funding. Several Democratic-led states—New York, Massachusetts, California, Wisconsin and Pennsylvania—defied the order and issued full payments, initially backed by federal court rulings later stayed by the Supreme Court. Nonprofit food banks have seen surging demand: the Capital Area Food Bank in Virginia has increased meal distributions by 20 percent and anticipates providing eight million additional meals this fiscal year.
**Air travel has also suffered major setbacks as unpaid air traffic controllers continue working.**
On November 8 alone, more than 1,500 flights were canceled and 6,600 delayed. Staffing shortages across over 15 control centers raise the risk of airspace closures ahead of the Thanksgiving travel peak. Transportation Secretary Duffy and industry groups warn that flight reductions could reach 20 percent at major airports, leading travelers to reconsider holiday plans amid safety and reliability concerns.
**Economic forecasts warn that a prolonged shutdown could inflict lasting damage.**
Goldman Sachs estimates US GDP has contracted by 1.5 percent so far, with a potential outright decline in the fourth quarter if travel disruptions worsen. Treasury Secretary Besant cautions that quarterly growth could be cut in half, while consumer confidence has fallen to a November index of 50.3—its lowest since June 2022. Inflation expectations remain elevated amid widespread anxiety over continued government inaction.
**In Washington, political maneuvering has yielded little progress.**
Senate Majority Leader Thune reports ongoing bipartisan discussions on a short-term reopening measure and follow-on appropriations bills, but fierce disputes over amendments related to the Affordable Care Act and immigration benefits have stalled agreement. Republican efforts to modify filibuster rules have failed, leaving key budget issues unresolved and essential services unfunded.
### IMPACT ANALYSIS
**From this Development, various impacts could cascade through the system, to a lesser or greater extent, depending on the severity and criticality of the shocks.**
| Domain | Causal Chain | Possible Outcome |
|---|---|---|
| Geopolitics & Defense | (Force-projection footprint ↓ → Forward-deployed troop surge ↓ → Regional instability composite ↑ → Geopolitical risk index ↑) | Weaker overseas force projection and surge capacity intensify regional tensions and elevate the geopolitical risk index. |
| Social Cohesion | (Social-safety-net generosity ↓ → Crisis-induced poverty delta ↑ → Protest-to-dialogue conversion ratio ↓ → Intergroup violence incident frequency ↑) | Cuts to social safety nets increase poverty-driven unrest, reducing dialogue channels and fueling more intergroup violence. |
| Transportation & Logistics | (Logistics-workforce training & certification system ↓ → Air-cargo capacity utilisation ↓ → Supply-chain disruption days per year ↑ → Logistics-performance index (LPI) score ↓) | Deteriorating workforce training reduces air-cargo capacity, prolongs supply-chain disruptions, and lowers the LPI score. |
| Macroeconomics & Growth | (Fiscal-rule credibility index ↓ → Sovereign spread over risk-free rate ↑ → Recession probability (12-month ahead) ↑) | Eroded fiscal-rule credibility drives up sovereign borrowing costs and raises the odds of a recession within the next year. |
| Politics | (Partisan ideological-polarisation score ↑ → Legislative gridlock duration ↑ → Policy-uncertainty index deviation ↑ → Business-confidence diffusion index ↓ → Private fixed-investment growth deviation ↓) | Escalating polarization prolongs gridlock, spikes uncertainty, undermines business confidence, and depresses private investment growth. |
### BOTTOM LINE
- The prolonged US federal government shutdown, now in its 40th day, has halted appropriations across multiple agencies and produced immediate operational strains domestically and overseas, including unpaid local workers at US bases, forced cuts to SNAP benefits, widespread air-traffic staffing shortages, a measurable GDP contraction so far, and continuing legislative deadlock.
- Core drivers of the situation are the lapse in enacted appropriations, the administration’s directive to curtail program payments, partisan disputes over health and immigration amendments that block a stopgap funding measure, and the legal/political choices by states and foreign hosts to advance or withhold payments in the absence of US funding.
- Delayed wage payments to local civilian base staff in Italy, Portugal, Germany and Spain have already prompted foreign governments to front salaries or threaten industrial action, which reduces on-base administrative capacity and degrades surge readiness; the causal chain runs from funding lapse → unpaid local staff → host-nation financial intervention or labor disruption → reduced base operational throughput → diminished forward-deployment and crisis-response capability.
- The USDA order to limit SNAP to 65 percent of normal November benefits, and subsequent state-level defiance and court battles, is raising food insecurity for millions, increasing demand on emergency food providers, and creating legal-administrative friction between federal and state governments; the causal edge is funding exhaustion → federal benefit reduction order → state refusals/legal stays → uncertainty in benefit delivery → heightened need for nonprofit and municipal resources.
- Unpaid air-traffic control personnel are producing significant flight cancellations and delays (1,500 cancellations and 6,600 delays on a single day), which threatens airspace throughput during peak Thanksgiving travel and reduces air-cargo capacity; the clear causal pathway is funding lapse → controller staffing/retention/training constraints → flight reductions and slot cancellations → passenger and cargo flow disruptions → weaker holiday travel revenues and supply‑chain interruptions.
- Macroeconomic consequences are already visible in a 1.5 percent GDP contraction estimate, lower consumer confidence, and forecasts that a sustained shutdown could flip the fourth quarter into negative growth; the mechanism is federal spending disruption and service interruptions → lower consumption and business activity → tighter financial conditions and higher recession probability over a 12‑month horizon.
- The political stalemate is amplifying policy uncertainty and eroding fiscal credibility, which is likely to widen sovereign risk premia, depress business investment, and slow hiring; the causal edge runs from prolonged gridlock → higher policy-uncertainty index → lower business confidence and deferred capital expenditure → downward pressure on private fixed investment and growth.
- Geopolitically, reliance on host-nation advances for base staff and the Pentagon’s insistence that civilians continue to work without pay create perceptions of US unreliability that adversaries and allies will factor into contingency planning, increasing regional risk; the linkage is local-pay disruption → operational fragility → perceived reduction in US force-projection → increased regional risk-taking by competitors.
- Expected near-term practical consequences most likely to occur are: reduced military surge capacity in theaters that depend on local civilians, increased food insecurity and strain on food banks and state budgets, measurable holiday travel disruption and supply-chain delays, a further drop in consumer and business confidence, and sustained market nervousness around US fiscal governance that could raise borrowing costs modestly in the near term.
- Recommended near-term actions for mitigation are: Congress should prioritize a targeted short-term appropriation to restore salaries and critical benefits; the administration should suspend directives that force states into legal quandaries over SNAP and coordinate with host nations to formalize temporary payment assurances; the FAA should authorize contingency staffing plans and temporary flight-slot reallocation to preserve critical cargo routes; businesses should pre-position inventory for Thanksgiving-sensitive SKUs and delay nonessential capital outlays; food banks and states should request emergency federal social-service waivers and mobilize private-sector donations immediately.
- For planners and stakeholders monitoring cascading risks, prioritize tracking three causal edges that will determine breadth of downstream harm: (1) duration of funding gap → continuity of base civilian pay, (2) enforcement of USDA administrative funding threats → state payment behavior and NGO load, and (3) controller staffing levels → airline schedule integrity and air‑cargo capacity; these three variables will most strongly predict whether the situation remains a short-term shock limited to operational friction or evolves into a broader economic and geopolitical strain.
Monitored Intelligence for China - Nov. 11, 2025
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15
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Erudite Risk takes an all risks approach to intelligence reporting. We categorize key intelligence into one of 40 different risk intelligence categories.
The goal is to provide intelligence that allows decision makers to avoid being blindsided by what they may have missed, while informing them to make better decisions as well.
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We categorize key intelligence into one of 30 different operations intelligence categories.
Different roles and functions within the organization can monitor different key issue areas. HR may monitor employment, wages, regulations, labor and management relations, etc., while P&L leaders may monitor overall developing trends.
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中信证券：2026年展望半固态放量与全固态上车两条主线
CITIC Securities: 2026 Outlook Focused on Two Main Trends – Mass Adoption of Semi-Solid State and Entry into All-Solid State Batteries
Sina Finance | Local Language | News | Nov. 11, 2025 | UndeterminedTech Development/Adoption
CITIC Securities projects that global solid-state battery shipments will surpass 700 GWh by 2030, with all-solid-state batteries accounting for over 200 GWh. China has achieved a curve-overtake in semi-solid-state battery mass production, outpacing Japan, Europe, and the U.S., and is accelerating efforts in all-solid-state battery development. The target for Chinese manufacturers is small-batch production and vehicle installation of all-solid-state batteries by 2026–2027, aiming for commercialization by 2030.
The report highlights solid electrolytes—polymers, oxides, sulfides, and halides—as core materials, with semi-solid-state batteries primarily using polymers and oxides, while all-solid-state batteries rely on sulfides and halides. Cathode and anode materials are expected to transition from high-nickel ternary cathodes and silicon-based anodes to lithium-rich manganese cathodes and lithium metal anodes. Equipment for all-solid-state batteries is undergoing significant changes, including adoption of dry-process electrode fabrication, elimination of liquid injection, use of stacking over winding, and new processes like isostatic pressing and high-pressure formation.
The solid-state battery sector, comprising 62 core A-share companies, has a market capitalization exceeding 1.2 trillion yuan as of late 2025 and has outperformed the CSI 300 Index, rising 64.3% from June to October 2025. Key investment opportunities are identified in sulfide electrolytes, lithium metal anodes, carbon nanotubes, and specialized equipment supporting dry-processing and high-pressure manufacturing.
Looking ahead to 2026, semi-solid-state batteries are expected to scale significantly in consumer electronics, automotive power, and energy storage markets with broader downstream adoption. Meanwhile, all-solid-state batteries will initiate on-vehicle road testing domestically, focusing on pressure control and solid–solid interface improvements supported by advanced cell manufacturing equipment and onboard pressurization.
Risks to this outlook include potential shifts in new energy vehicle technology routes, insufficient policy support, underperformance in edge AI developments, delayed mass production or vehicle integration of solid-state batteries, unmet cost-reduction targets, and intensified market competition.
CITIC Securities recommends capitalizing on growth opportunities by investing in battery materials, equipment manufacturers, and segments supporting the industrial expansion of semi-solid- and all-solid-state batteries through 2026 and beyond.
China's KJ-600 carrier-borne early warning aircraft nicknamed Nezha: developer
Global Times | English | News | Nov. 11, 2025 | UndeterminedTech Development/Adoption
China’s KJ-600 carrier-borne early warning aircraft, nicknamed Nezha after a figure from Chinese mythology, is a key element of the air wing on China’s third aircraft carrier, the Fujian (Hull 18), which is equipped with electromagnetic catapults. The aircraft recently completed inaugural electromagnetic catapult-assisted takeoff and arrested landing training on the carrier, underscoring its operational readiness.
The KJ-600’s nickname derives from its unique design, which reportedly resembles Nezha’s features: three heads formed by the engines, landing gears, and nose; six arms represented by foldable wings and vertical tails; a circular radome mimicking a legendary bracelet; and red fuselage markings evoking mythical artifacts. Its spinning propellers also remind observers of Nezha’s wind-and-fire wheels. The aircraft’s large radome houses maximized early warning antennas that push the limits of balance, aerodynamics, and controllability for an aircraft of its size.
Functionally, as an airborne command post, the KJ-600’s primary role is detecting, sensing, and disseminating situational awareness within carrier formations. It also supports non-military missions like search and rescue coordination and airspace control. The large radome and antenna size enhance detection range, enabling the aircraft to detect ultra-low-altitude sea-skimming threats, which surface vessels’ radars cannot reliably track due to Earth’s curvature. This capability makes the KJ-600 a significant force multiplier for carrier groups.
The aircraft’s four vertical tail configuration improves tail control while meeting carrier deck and hangar height constraints. Additionally, its carrier-designed engine provides corrosion resistance and the ability to rapidly surge power, essential for short takeoffs, arrested landings, wave-offs, and withstanding stresses from catapult launches and deck landings.
Domestic vehicle sales up as tax change looms
China Daily | English | News | Nov. 11, 2025 | UndeterminedTaxes
Chinese domestic vehicle sales surged in October 2025, driven by a forthcoming change in new energy vehicle (NEV) purchase tax policies. Beginning January 1, 2026, the tax exemption on NEVs will be halved to 50 percent, with a per-vehicle cap of 15,000 yuan ($2,105), ending over a decade of full exemption. This impending policy shift has accelerated consumer purchases to benefit from the current full exemption. Additionally, uncertainties over the renewal of the 2025 trade-in policy have prompted faster buying decisions.
To ease the transition, local governments and automakers introduced subsidies. Guangdong province offered consumption vouchers from November 2025 through March 2026 for NEVs and National VI-compliant fuel vehicles. Automakers like Zeekr, Xiaomi, Nio, and IM Motors launched programs to cover the tax difference for customers whose vehicle deliveries extend into 2026 due to manufacturer delays. Industry observers anticipate strong NEV sales in Q4, expecting sales to exceed 16 million units this year, representing over half of total vehicle sales in China.
October sales performances showed significant growth among major automakers. SAIC Motor reclaimed the top sales position with 454,000 vehicles sold, a 12.96 percent year-on-year increase, and NEV sales growing 32 percent to 206,700 units. BYD sold 441,706 vehicles, up 11.47 percent month-on-month though down 12 percent year-on-year, with its Dynasty and Ocean series accounting for nearly 90 percent of its sales. Geely exceeded 300,000 vehicle sales for the first time, posting a 35 percent year-on-year increase, with NEVs comprising 58 percent of sales. FAW Group sold 305,000 vehicles, up 8.1 percent year-on-year, and achieved a joint venture milestone of 30 million vehicles sold.
Chery and Changan also saw strong sales growth in October, with Chery moving 281,161 vehicles and achieving over 1 million exports in 2025, and Changan increasing sales by 11 percent with a record 119,000 NEVs sold. Among NEV startups, Leapmotor led with an 84.1 percent year-on-year increase and over 70,000 vehicles sold, holding the top spot for eight consecutive months. XPeng continued strong growth with 42,013 vehicles sold and debuted a range-extended version of its X9 MPV. Nio posted a 92.6 percent sales increase with over 40,000 vehicles delivered, supported by its Onvo sub-brand. Conversely, Li Auto experienced a decline, delivering 31,767 vehicles in October, down 38.2 percent year-on-year, and lowered its 2025 sales targets from 700,000 to 640,000 vehicles.
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