Greater China-111259930

1Haibin Zhu (852) 2800-7039haibin.zhu@jpmorgan.comJPMorgan Chase Bank, N.A., Hong Kong BranchGrace Ng (852) 2800-7002grace.h.ng@jpmorgan.comTingting Ge (852) 2800-0143tingting.ge@jpmorgan.comAsia Pacific Economic Research01 November 2024J P M O R G A Nsupport major banks’ capital injection; and (2) a lift of the local government debt ceiling to support local government debt swap. A lift of the central government debt ceiling (e.g., 6tn yuan for three years, i.e., 2025-27) and a lift of the local government debt ceiling to support housing destocking (4tn yuan, per Reuters) cannot be ruled out. But this would not impact our 2024 and 2025 forecasts, as we have penciled in these components.A related question is whether, in a Trump-win scenario with a risk of a renewed tariff war, the NPC meeting will conclude with a meaningfully larger stimulus package or more aggres-sive consumption support. In our view, this has a very low likelihood at the November NPC. First, the NPC is the legis-lative body, but not a decision-making body like the Politburo or State Council, etc. Second, the government could wait until the November or December Politburo meeting and the December Central Economic Work Conference to have a bet-ter assessment with higher visibility on tariff policy if Mr. Trump wins. The final 2025 fiscal numbers might not be pinned down until the Two Sessions next March.Industrial profits fell 27.1%oya in Septem-berChina’s industrial profits fell 3.5%oya for January-September, compared to +0.5%oya for January-August (Figure 1). For the month of September, the NBS estimates that industrial profits dropped 27.1%oya (vs. -17.8%oya in August). The softness in the September industrial profit data seems to reflect: (1) sluggish domestic demand and general weakness in industrial corporates’ pricing power (recall that PPI fell 2.8%oya in September and 0.8% m/m sa); (2) overall indus-trial corporates’ sales revenue growth (at 2.1%oya in January-September) underperforming the rise in the costs of produc-tion (+2.4%oya), dragging down profit margins; and (3) a high base effect, as industrial profits picked up notably in August and September last year.-40-20020406080100-20-10010203040501112131415161718192021222324%oya, ytd, both scalesFigure 1: China industrial enterprises' profits and sales revenueIndustrial sales revenueIndustrial profitsSource: NBS, J.P. Morgan•China: NPC meeting begins next week as Reuters reports 10tn yuan extra debt•October PMIs picked up as policies turn supportive•Hong Kong SAR: 3Q GDP disappointed as exports engine softened, downgrade full-year forecast•Taiwan: Solid 3Q GDP growth on strong exports, fur-ther capex expansion and modest consumption growth•PMI eased further, to 50.2 in October, export momen-tum to moderate in coming months•Next week: China trade and FX reserves, Taiwan CPI and tradeThe NPC Standing Committee will be held 4-8 November, and the major announcements from it will come as the meet-ing is concluded on the last