Guotai Haitong: Policies to stimulate internal consumption power, recommend focusing on four main lines of policies resonating with fundamentals.

Guotai Haitong released a research report stating that in 2026, consumption policies will continue to be strong, with a more optimal structure and stronger long-term effectiveness. Under the triple driving forces of "increased income + coordinated financial policies + upgraded service consumption," the consumption sector is expected to have high certainty of full-year recovery. It is recommended to focus on four main themes that resonate with policies and fundamentals: service industry recovery, mass consumption (price increase line), new consumption, and emotional consumption. The main viewpoints of Guotai Haitong are as follows: The government work report for 2026 will prioritize expanding domestic demand and boosting consumption as a strategic core, with policies characterized by "stable tone, strong tools, efficiency improvement, and structural optimization." 1. More stable positioning: The continuation of the "boost consumption special action," with consumption remaining the primary driver of economic growth and strong policy consistency; 2. More practical tools: The establishment of a new 100 billion yuan special fund for financial and fiscal coordination to stimulate domestic demand, coupled with 250 billion yuan in special government bonds to support the replacement of old with new, combining fiscal and financial efforts; 3. Deeper foundations: Introduction of the first urban and rural residents' income increase plan, focusing on increasing income for low-income groups, property income, and improving social security, shifting from "able to consume" to "dare to consume, willing to consume"; 4. More optimal structure: Focus on improving the quality of service consumption, revitalizing offline consumption, activating the sinking market, removing consumption restrictions, and unleashing the potential of cultural tourism, health preservation, and sports consumption. Compared to 2025, the 2026 government work report has the following highlights: 1. Policy innovation: Introduction of a new 100 billion yuan fund for financial and fiscal coordination in 2026, using a combination of interest subsidies, guarantees, and risk compensation; 2. Income increase statement: In 2025, it was "promote income increase through multiple channels"; in 2026, it was upgraded to "formulate and implement urban and rural residents' income increase plan," with added property income; 3. Service consumption: In 2025, it was described as "expand service supply"; in 2026, it is clear as "service consumption quality improvement benefiting the people action," creating high-profile new scenes; 4. Financial support: In 2025, interest subsidies were supplementary, and in 2026, the scope of interest subsidies has been expanded, the upper limit raised, the term extended, and credit repair support implemented; 5. Policy direction: In 2025, there was an emphasis on "expanding scale," while in 2026, the focus is on "improving efficiency, adjusting structure, stabilizing expectations," with greater long-term effectiveness. Investment themes based on the government work report orientation: 1. Service industry recovery: The policy clearly states the service consumption quality improvement benefiting the people action, optimizing holiday systems, activating offline consumption, and removing consumption restrictions; 2. Mass consumption (price increase line): The income increase plan supports the consumption of low-income groups, the replacement of old with new supports mass consumption, CPI increases moderately, benefiting categories such as food, beverages, daily necessities, electronics, and automobiles; 3. New consumption: Creating new consumption scenes, cultivating new growth points, with a focus on beauty, gold jewelry, new tea drinks, and cultural entertainment tracks; 4. Emotional consumption: Residents' expectations improved, leading to a resurgence in leisure, self-enjoyment, and experiential consumption. Risk warning: Risks of macroeconomic fluctuations, policies to boost consumption falling short of expectations, etc.