Deutsche Bank-China Macro Five Themes for the Next Five Years-118356799

21/10/2025 06:18:14 GMT21/10/2025 06:18:14 GMTDeutsche BankResearchYi Xiong, PhD(+852) 2203 6139 | yi.xiong@db.comResearchChina MacroFive Themes for the Next Five YearsDeutsche BankYi Xiong, PhD Chief Economist+852 2203 6139October 2025IMPORTANT RESEARCH DISCLOSURES AND ANALYST CERTIFICATIONS LOCATED IN APPENDIX 1. UNTIL 19th MARCH 2021 INCOMPLETE DISCLOSURE INFORMATION MAY HAVE BEEN DISPLAYED, PLEASE SEE APPENDIX 1 FOR FURTHER DETAILS.Deyun Ou Economist+852 2203 6139Deutsche BankResearchYi Xiong, PhD(+852) 2203 6139 | yi.xiong@db.com- Chinese risk assets performed strongly this year, but not long ago, “Japanification” was considered a major risk for China. What factors are driving this change in sentiment? - While short-term factors helped, a more significant influence may stem from evolving long-term perceptions of China. This report highlights five key long-term themes for the country's future:1.Productivity: China takes lead in industrial innovation2.Supply-side reform: “Anti-Involution” to restore profitability3.Domestic demand: Boosting consumption through services sector4.External demand: Chinese firms “Going Overseas”5.Currency: Rise of the Renminbi1Five themes for China in the next Five YearsAdam Posen, 2023Paul Krugman, 2025Deutsche BankResearchYi Xiong, PhD(+852) 2203 6139 | yi.xiong@db.comTheme 1: Productivity China Takes Lead in Industrial InnovationDeutsche BankResearchYi Xiong, PhD(+852) 2203 6139 | yi.xiong@db.comShifting Academic Focus: STEM Growth in Top Chinese Universities3Which majors are coming more popular at Peking University?13533818414512214436245727212386100-1000100200300400500Engineering Info Sci.PhysicsLawEconomicsMgmt.20202025ChangeTop 3 (increase in admissions)Bottom 3 (decrease in admissions)Source: Deutsche Bank Research, Peking UniversityDeutsche BankResearchYi Xiong, PhD(+852) 2203 6139 | yi.xiong@db.comAlmost half of AI top talents graduated from Chinese universitiesChina leads the world in the supply of engineers4Building Talent Pool: China's Growing Competitive Edge Source: Deutsche Bank Research, Paulson InstituteSource: Deutsche Bank Research, Oliss and others (2023)292017854211447181252222100102030405020192022Top 20% AI researchers by undergraduate degrees3.572.550.820.520.300.240.220.220.220.1901234ChinaIndiaUSRussiaIndonesiaBrazilMexicoFranceGermanyJapanNumber of STEM Graduates, million (2020)Deutsche BankResearchYi Xiong, PhD(+852) 2203 6139 | yi.xiong@db.comAndroid OS accelerated smartphone sales globally……with Chinese phone makers winning large market shares5Catching Up with Chinese Characteristics: the Case of the Smartphone IndustrySource: Deutsche Bank Research, IDC, statcounterSource: Deutsche Bank Research, China MITT051015‘07‘09‘11‘13‘15‘17‘19IOSSymbianBlackberryAndroidGlobal smart phone shipment, 100mn units0102030405060708090'08'09'10'11'12Chinese brands% of smartphone shipment in ChinaCore elements to China’s success: (1) a generational product upgrade, (2) open ecosystem with many compe