Morgan Stanley's Chief China Economist Robin Xing suggests the economy is currently in a passive adjustment phase driven by deflationary pressures, noting that policy focus remains heavily weighted toward technology and industrial supply chains. He cautions against expecting any near-term wave of broad liquidity easing, as the recent tightening measures do not represent proactive deleveraging.

The recent policy moves—including stricter real estate oversight, audits of back taxes for high-tech enterprises, and tighter controls on outbound investment and wealthy individuals' offshore income—each make sense individually. However, Xing argues that when combined, these measures carry a somewhat "pro-cyclical" effect. In essence, with a weak economy reducing tax revenues, fiscal authorities are forced into passive tightening to balance budgets, which stands in stark contrast to the deliberate, economy-wide regulatory crackdown seen in 2021.

Investors should not anticipate a massive "924-style" stimulus package. Even if new policies emerge, they are likely to be supportive and finely tuned rather than transformative. Capital is expected to flow into areas like power grid infrastructure, AI computing power, and climate-resilient projects. Large-scale, comprehensive stimulus aimed at directly boosting consumption, similar to what was seen two years ago, is highly unlikely to materialize.

On overseas risks, Xing highlights the potential for oil prices to break through $100 per barrel. Should US-Iran tensions escalate in the fourth quarter, Brent crude could return to triple-digit levels. Regarding global sell-offs triggered by Bank of Japan rate hikes, he advises against overreacting, asserting that as long as the global economy avoids a recession, hot money will naturally migrate toward cheaper alternative currencies.