State Council document issued to mitigate AI employment substitution impact; first-tier city housing prices stabilize | Weekly hot spot review

China's economy grew 4.5% year-on-year in the third quarter

Data from the National Bureau of Statistics show that in the first three quarters of this year, gross domestic product (GDP) grew 4.6% year-on-year. Of this, growth in the third quarter was 4.5%, up 0.2 percentage points from the second quarter.

Among these, the services sector performed strongly, with value added reaching 62.8 trillion yuan in the first three quarters, up 5.2% year-on-year, 0.6 percentage points faster than the economic growth rate over the same period. The National Bureau of Statistics said the services sector's contribution to economic growth reached 66.3%, up 5.6 percentage points year-on-year, making it the main engine driving economic growth.

In addition, new growth drivers represented by high-end manufacturing, the digital and intelligent economy, and modern services continued to contribute more than 40% to economic growth in the first three quarters, with growth in high-tech manufacturing and digital product manufacturing both accelerating, further passing the "baton" of economic growth to new growth drivers.

[Comment] Third-quarter economic growth picked up 0.2 percentage points from the second quarter, a hard-won result amid external shocks such as the rise in international crude oil prices caused by the Middle East conflict. Among these, high-tech industries and exports performed strongly, playing an important role in stable economic performance and the shift toward new growth drivers. In the next stage, the focus of observation will shift from whether aggregate growth can remain stable to whether the rise in prices is sustained and whether domestic demand can take over the baton, which will determine the quality of the economic recovery. The National Development and Reform Commission said recently that it is studying and formulating an implementation plan for the strategy of expanding domestic demand (2026-2030) and will accelerate its issuance and implementation. As fiscal and financial policies coordinated to boost consumption are further strengthened, consumption growth in the fourth quarter is expected to accelerate.

Home prices in first-tier cities continue to lead month-on-month gains

Data from the National Bureau of Statistics show that in September, among 70 large and medium-sized cities, sales prices of new commercial residential housing and second-hand residential housing in first-tier cities rose or remained flat month-on-month for seven consecutive months, while the month-on-month declines in second- and third-tier cities generally narrowed.

Looking at year-on-year data, the year-on-year declines in sales prices of commercial residential housing in first-, second- and third-tier cities all narrowed. The year-on-year decline in second-hand residential housing prices in first-tier cities narrowed by more than 1 percentage point, the most notable improvement among all city tiers and housing types, pointing to further repair of second-hand housing prices and the home-swap chain.

Data from the Ministry of Housing and Urban-Rural Development show that from January to September, the online-signed area for second-hand housing transactions nationwide was 617.46 million square meters, up 10.7% year-on-year; in September, the online-signed area for second-hand housing transactions rose 11.7% year-on-year.

Among these, Shanghai's second-hand home prices rose 0.5% month-on-month, leading the 70 cities; they rose 0.8% year-on-year, making Shanghai the first city among the 70 and the only first-tier city to turn positive year-on-year.

[Comment] Positive signals on residential prices in the 70 large and medium-sized cities have further increased, and the stabilizing trend in the housing market continues to strengthen. In particular, home prices in core cities are beginning to transition from halting declines to stabilizing, and the second-hand housing market continues to perform actively, continuing to play a leading role in stabilizing the market. Analysts believe that as the policy of interest subsidies on home purchase loans is implemented and local detailed rules for reform of the commercial housing sales system are rolled out one after another, policy measures to stabilize the market, support demand and promote transformation will further take effect, and the real estate market is expected to continue its stabilizing trend in the fourth quarter.

National fiscal revenue exceeded 17 trillion yuan in the first three quarters

The latest data from the Ministry of Finance show that in the first three quarters of this year, national general public budget revenue was about 17.2 trillion yuan, up 5.1% year-on-year.

Among this, national tax revenue was about 14.1 trillion yuan, up 6.1% year-on-year, 5.4 percentage points higher than the same period last year and also higher than the full-year expected growth rate of 2.9%.

On the expenditure side, in the first three quarters of this year, national general public budget expenditure was about 21 trillion yuan, up 1% year-on-year, below the official full-year expected growth rate. Among this, spending on health, social security and employment, and education, which are closely related to people's livelihood, all grew faster than the average. Infrastructure-related spending declined overall.

[Comment] Tax revenue growth in the first three quarters was significantly faster than the full-year expectation, mainly driven by factors such as the recovery in PPI driving improved corporate profits and growth in imports and exports boosting related tax revenue, laying the foundation for stable and improving national fiscal operations. However, the expenditure side is generally slow. Recently, the Ministry of Finance has successively introduced incremental fiscal policies, arranging the use of 550 billion yuan from the remaining local government debt quota to improve the general public budget guarantee capacity of counties and districts and support localities in expanding effective investment, and signals of moderate fiscal strengthening are being released.

Major State Council document: Mitigate the employment substitution impact of AI applications

The General Office of the State Council recently issued the Opinions on Adapting to the Development of Artificial Intelligence Technology and Helping Build an Employment-Friendly Development Model. The Opinions emphasize the need to actively enhance the positive effects of AI in creating job opportunities, empowering traditional positions, improving employment quality and stimulating entrepreneurial vitality, effectively mitigate the employment substitution impact of AI applications, and strive to achieve inclusive development in which technological progress and industrial upgrading are coordinated with employment promotion and livelihood improvement.

The Opinions deploy 18 major tasks in six areas:

Strengthen the job-creation effect of AI. Expand new space for AI employment in emerging fields, cultivate new momentum for small and medium-sized enterprises to stabilize and expand jobs, create new models of employment and entrepreneurship in the AI field, and accelerate the development of new occupations in the AI field.

Build an employment-friendly path for AI upgrading. Tap the employment potential of AI in traditional fields, mitigate the employment substitution impact of AI applications, and establish a risk assessment mechanism for employment in AI applications.

Improve workers' digital literacy and employability. Jointly cultivate AI innovative talent and implement a special AI training program.

Promote AI-enabled high-quality employment policy services.

Improve the system for protecting workers' rights and interests and the social security system. Optimize the worker rights and interests protection system to adapt to human-machine collaboration, improve the social security system for flexible employment and workers in new forms of employment, and improve the income distribution mechanism that adapts to the development of artificial intelligence technology.

Improve the employment monitoring, early warning and risk response system for AI applications.

[Comment] The disruptive changes brought by AI technology are a double-edged sword for employment. On the one hand, they can greatly improve production efficiency and create some new jobs; on the other hand, they will also replace a large number of repetitive tasks, and the workers involved face the danger of job transfer or unemployment. Technological progress must ultimately serve the improvement of people's livelihoods. As for the employment shock that AI may bring during the transition period, we should plan ahead and prepare an institutional buffer. This special deployment to "mitigate the impact of employment substitution," together with supporting institutional arrangements such as risk assessment, monitoring and early warning, and rights and interests protection, will help prevent the dividends of technology from being concentrated among a small group of people and avoid ordinary workers unilaterally bearing the transformation costs of technological change.

National Data Group established

On October 20, the National Data Group was established in Xiong'an New Area, Hebei. The company takes the development and utilization of data resources as its main business and serves as a national team for data element services, a leader in the interconnection of data infrastructure, and a strategic force for national data science and technology innovation.

The National Data Group ranks 28th on the "List of Central Enterprises," after China Telecom, China Unicom, China Mobile and China SatNet, and before China Electronics Corporation.

In recent years, various localities have also established data groups one after another. Beijing, Shanghai, Jiangsu, Sichuan, Hubei, Shaanxi, Hunan, Henan, Fujian and other provinces have all set up provincial-level data groups.

[Comment] At present, massive amounts of data are scattered across different departments, industries and fields. There are barriers to cross-domain circulation, high data governance costs, and still insufficient supply of high-quality datasets, which restricts the release of data value. The establishment of the National Data Group fills the gap in the state-owned capital entity in the data field and also marks a key step in the market-based allocation of data elements in China. A central enterprise takes the lead in building a platform and coordinates the promotion of data resource development and utilization, both releasing data dividends and keeping security risks under control. This blazes a path of data reform with Chinese characteristics and helps enhance China's position in global competition over data resources.

Several tech high-flyers speak out, A-shares stage deep V-shaped rebound

This week, A-shares saw another round of marked adjustment. The Shanghai Composite Index fell below 3,600 points during trading on the 23rd, hitting a low of 3,574.27 points, once again setting a new one-year low.

The ChiNext Index fell for nine consecutive trading days and briefly lost 2,500 points in morning trading on the 23rd, refreshing a one-year low. CATL, the largest weighted stock on ChiNext, plunged, becoming an important reason for dragging down the ChiNext Index.

To send a positive signal to the market, at midday on the 23rd, several tech high-flyers including TFC Optical Communication, Accelink Technologies, Lianxun Instruments, Zhongji Innolight, Eoptolink Technology and Yuanjie Semiconductor spoke out collectively, disclosing recent production and operation conditions. At the same time, trading in several broad-based ETFs surged. Among them, the turnover of E Fund ChiNext ETF, Huatai-PineBridge CSI 300 ETF and ChinaAMC STAR 50 ETF all exceeded 15 billion yuan. In addition, the first batch of 18 active ETFs was officially offered for sale, expected to bring in up to 36 billion yuan in incremental funds.

In the afternoon of the 23rd, the dual-innovation indices staged a strong counterattack, and A-shares rebounded after touching bottom. As of the close, the Shanghai Composite Index stood at 3,690.48 points, up 0.89%; the ChiNext Index surged 4.16%, and the STAR Composite Index rose 3.68%.

[Comment] Analysts believe that the huge volatility in the tech stock sector was triggered by multiple factors, including doubts about the profit expectations of massive AI capital expenditure, "killing expectations" before the third-quarter reports of optical module companies, and the drag on the index from the third-quarter results of leading ChiNext companies falling short of expectations. It was also hit by the widespread adjustment in overseas markets. In addition, the Middle East conflict remains full of uncertainty, further lowering risk appetite. After the panic, the market may see a sentiment-repair rebound, but for it to become a trend, attention should also be paid to key data such as margin financing balances stopping their decline and the financial reports of North American tech giants.

Monetary policy target rate explicitly set as the overnight rate

On the 19th, Pan Gongsheng, governor of the People's Bank of China, made clear at the opening ceremony of the 2026 Financial Street Forum Annual Meeting that the interbank overnight repo rate has become the target rate for monetary policy regulation. He said that the central bank will study the timing to switch the maturity of its main open market operation instruments to overnight, and the open market overnight repo rate will accordingly become the main policy rate.

In recent years, the conditions for the overnight rate to serve as China's market pricing benchmark have become increasingly mature. Overnight trading has become the main maturity variety in the money market, accounting for 90% of average daily trading volume. DR001, based on real transactions, serves as the risk-free overnight rate, and its status as a market benchmark has been continuously enhanced.

At the end of June this year, the central bank began to add overnight reverse repo operation varieties, further improving its ability to regulate the overnight rate. Since then, the frequency and volume of operations have steadily increased.

[Comment] At present, the interbank overnight repo rate has in fact become the target rate for the central bank's monetary policy regulation, but the maturity of the main open market operation varieties and the main policy rate is still 7 days, and the two are not fully consistent. Industry insiders believe that switching the open market operation variety to overnight and the policy rate to the overnight reverse repo rate will help improve the precision of liquidity management and smooth the transmission mechanism of policy rates. Overnight instruments have short maturities and continuous operation arrangements, which also makes it easier for financial institutions to arrange daily liquidity management. But it should be made clear that the transition of the policy rate from 7 days to overnight is a continuous improvement of the central bank's own monetary policy regulation framework and should not be equated with a rate cut.

France hit by dual political and financial storms

France has recently seen protests and demonstrations break out in many places, with violent riots occurring in some areas. The trigger for these protests and demonstrations was students' dissatisfaction with the shortage of educational resources and poor school conditions. Subsequently, different groups dissatisfied with rising energy prices, high living costs, and declining public services gradually joined in.

The ongoing violent riots have intensified the sell-off of French debt since the end of September. On the 21st, the yield on France's 10-year government bond broke through 5% during intraday trading, the first time since 2002. The spread between French and German 10-year government bond yields widened to about 157 basis points.

At the same time, France's debt scale has continued to climb. As of the end of the second quarter of this year, France's public debt as a share of gross domestic product reached 119%, a relatively high level in the euro area and far exceeding the 60% reference value stipulated by the EU.

To control debt growth, the French government plans to push forward fiscal consolidation measures and strive to reduce the fiscal deficit ratio to 5% by 2027. However, divisions among political factions in the French parliament are severe, and with the presidential election approaching, there is considerable uncertainty over whether the fiscal consolidation budget bill can pass parliament.

[Comment] At present, the French economy is mired in multiple dilemmas, including high energy prices, fiscal austerity, and uncertainty over economic policy, and has fallen into a vicious cycle: rising energy prices and high living costs have triggered social unrest, which in turn has set off a wave of government bond selling; and continuously rising government bond yields, in turn, have increased the government's financing burden and debt pressure, further squeezing policy space. How to find a balance between easing livelihood pressures, restoring economic growth, and controlling public debt will be a long-term challenge facing the French government.