Summary

February CPI turned negative for the first time since 2021, but 李丰 believes the Lunar New Year calendar shift, the seasonal base effect from last year’s rain and snow, and the post-holiday pullback in food, transport and tourism explain a substantial part of the move, so it cannot be directly declared a “deflation verdict.” More notable is that the statistics bureau provided qualitative and quantitative explanations for each item for the first time; at the micro level, fast-moving consumer goods and restaurants saw “a clear reduction in the scope and intensity of price-cutting and discount promotions, but still no signs of price increases,” pointing to supply clearing and a slight recovery in demand, but not yet pricing power.
Exports rose just over 3% in the first 2 months and imports fell just over 7%, yet the two together pushed the trade surplus to a new high; behind the weak data were the Lunar New Year effect, soft global demand and a high base from the pre-Trump “rush to export.” Agricultural products also carry both pricing and diplomatic value: China reached agricultural trade arrangements with Ukraine and moved against Canada amid the US-Canada tensions and a change of prime minister. 李丰 views both through the lens of China diversifying import sources and responding when third countries follow Washington in applying pressure.
李丰’s key to Trump’s second term is not an immediate all-out move against China, but that “you must secure the home front before dealing with the outside”: remove disloyal power nodes first to ensure reforms are implemented, support remains durable and personal security is protected. Trump’s 1-hour-40-minute congressional address barely mentioned China, offering supporting evidence for that sequencing; his external principle is that “every single thing must be counted,” with every US outlay required to deliver greater benefits to America.
To 李丰, US retrenchment from the world and its demands involving Mexico, Canada, Greenland and the Panama Canal are one policy: withdraw from costly distant commitments while building out a strategic buffer around the homeland. This looks more like a return to a Monroe-style posture from around World War I; “international retrenchment, near-shore expansion” explains Trump’s geopolitical behavior more coherently than treating each move as a random territorial impulse.
Trump is simultaneously cutting government spending, sharply reducing illegal immigration and imposing tariffs, potentially pushing the US toward stagflation marked by declines in both employment and job creation, alongside simultaneous increases in goods and mass-market service prices. Biden-era resilience depended on government-linked jobs in education and healthcare and cheap immigrant labor to fill service roles; with both supports being dismantled, 李丰 judged at the time of recording that the US was “very close” to economic stagnation plus inflation.
US markets have shed roughly $4T since Trump’s inauguration and Tesla fell 15% in a single day, while Chinese markets did not follow lower the next day, making China-US capital rebalancing more important to watch than a simple Hong Kong valuation recovery. The previous inflow into Hong Kong was mainly Southbound flows and reallocations from India, Japan and other Asian markets, not a migration of US equity and bond capital; the real variable is whether long-term money starts revisiting the 10-year question—“who wins, China or the US?”—with the family office of a prominent Chinese entrepreneur already receiving “instructions from the boss to take another look at China.”
The old dollar loop relied on US deficits exporting dollars, equities, bonds and derivatives pulling them back in, low-cost overseas labor suppressing inflation, and alliances and military power maintaining order; Trump’s tariffs, transaction-by-transaction accounting and global retrenchment are dismantling those links at the same time. 李丰’s honest answer is: “When all the variables are working, you can draw the circle; once several of them are removed, what it turns into is the difficult question today.” De-dollarization may accelerate, but the new equilibrium will emerge only through the actual reactions of all parties.
China’s policy apparatus is positioning capital markets as a critical source of financing for economic restructuring, with the fifth listing standard and a venture-capital fund lasting 20 years and potentially reaching the trillion-yuan scale as two direct signals. 李丰 attributes the advantage of personal capital to concentrated holdings and near-zero time costs: after entering on Mar. 18, 2024, his 1-year return far exceeded expectations; when 李翔 asked whether individuals could withstand deep drawdowns, 李丰 acknowledged that most retail investors lose patience after a 20% decline, and frequent trading wastes precisely the long-term capital advantage they possess.

Deep dive

1. Negative CPI was driven mainly by the Lunar New Year shift and seasonal base effects, not enough to call deflation

李丰 first stressed the institutional backdrop behind the credibility of the data: China reaffirmed at the end of 2023 and in 2024, through Party regulations and requirements related to the Statistics Law, that statistical fraud would carry liability; yet during the Two Sessions it still published declines in CPI and PPI rather than deliberately avoiding numbers that “look bad.”
This time, the statistics bureau did not simply cite “seasonal factors” or “a high base last year,” but explained the qualitative and quantitative drivers of each major component. 李丰 called the unusual part that “it walked you through the quantitative causes behind every major category change.”
Food, Chunyun travel and tourism saw demand released in concentrated fashion before the holiday, then naturally retreated afterward; the calendar shift pushed more of the decline into February. The same period last year also saw heavier rain and snow in southern and eastern production areas, affecting spoilage, preservation and transport while creating an additional seasonal base effect.
So “China’s first negative CPI growth in 4 years” is real data, but not the whole conclusion. 李丰 retained the other half: the recovery in consumption may still not have fully reached prices. When foreign and social media add only “because of the Lunar New Year shift” and still lead to a verdict of “a complete mess,” they lose the sense of scale.

2. Price wars are easing, but the new equilibrium still lacks the power to raise prices

The micro signal from a Morgan Stanley closed-door strategy meeting was that in fast-moving consumer goods, retail and mass-market restaurants—the sectors where competition was fiercest last year—“the scope and intensity of price-cutting and discount promotions have clearly diminished, but there are still no signs of price increases.”
李丰’s translation: some supply has already been “competed out,” while demand has recovered slightly, creating a new equilibrium on both sides; but demand is not yet strong enough for supply to fall short, so companies can offer fewer discounts but still cannot restore price increases or expand margins.
Hard data from daily experience also improved. The post-holiday period should be seasonally weak, but from late February to early March, Beijing-Shanghai “bull-and-horse routes” departing from Daxing repeatedly reached around 95% occupancy, with large aircraft often having only a dozen or so seats left; previously, Daxing’s Beijing-Shanghai flights were typically much less full than those at Capital Airport.
Business entertaining also recovered better than last year, with reservations for private rooms at mid- to high-end restaurants picking up. 李丰 placed this in the rhythm of the government work report: “up first, then down, then up again” described 2024, while 2025 was described as having “a good start.” For now, all that can be confirmed is that things are “slightly better,” not a broad-based boom.

3. Slower exports reflect the high base from front-loading, while weaker imports directly drove the record surplus

Exports still rose just over 3% year on year in the first 2 months, while imports fell just over 7%, pushing the surplus to a new high. 李丰 said both figures were weak by the standards of most regions globally—“not weakness specific to one region”—and could simultaneously reflect the Lunar New Year, global seasonality and tariff expectations.
Export growth fell rapidly from just under 10% in Q4 last year to just over 3% this year, but the sequential comparison is not clean: before Trump’s inauguration, companies stockpiled and shipped goods early to avoid potential tariffs, creating a “rush to export.” Preparation for the Western shopping season also made Q4 a peak season to begin with.
The slowdown in exports may therefore be starting to reflect tariffs, or simply a pullback after demand was pulled forward. 李丰 offered no single-cause conclusion, insisting that tariffs, peak-season effects, the Lunar New Year and the base effect all remain in the framework.

4. Agricultural products are both price inputs and diplomatic leverage when China chooses targets for retaliation

China reached multiple agricultural trade agreements with Ukraine. 李翔 read this as evidence of relationship repair and diplomatic flexibility: “not a world of absolute friends and enemies, and not blindly taking one side.” 李丰 accepted that layer while observing it together with the response to Canada.
China only recently imposed retaliatory tariffs on some Canadian agricultural products, while Canada’s tariff increases on China date back to last year. The timing coincided with Washington oscillating between tariffs and exemptions for Canada and Mexico and Canada replacing its prime minister; the US at one point pushed the exemption deadline to Apr. 2, then discussed a 50% tariff on specific Canadian products, while Canada said it would retaliate against $150B of US goods.
李丰 went further: Canada chose confrontation while Mexico was more compliant, yet both at one point received roughly similar delays. Trump’s approach looked less like “divide and rule” than using tariffs as bargaining chips. China’s move against Canada therefore reflects both changes within Canada and US-Canada tensions, as well as a broader recalibration.
李丰 cited Australia as a precedent: when a third country followed the US in pressuring China, Beijing took measures against wine and agricultural products, then rebalanced the relationship, and Australia’s position shifted as well. The principle is not to absorb every conflict head-on, but that “you can’t casually help the tyrant do evil.”

5. Developed economies are re-primarying their exports, explaining the frequency of agricultural products on tariff lists

《天下格局》 prompted 李丰 to focus on a long-term shift: since the 1980s, developed economies such as the US and Europe have imported an increasing share of high-value-added manufactured goods, while their exports have contained more agricultural products, minerals and lightly processed commodities. The change reflects both industrial restructuring and agricultural subsidies.
Over nearly a century of industrialized US agriculture, output rose roughly 8x, while broad energy input per unit of land rose roughly 40x—including machinery and irrigation—equivalent to “using 5x the energy to achieve 1x the efficiency.” Scale does not inherently mean low input; it relies on energy, capital and policy subsidies.
李丰 sees food and energy as the foundation of national security, with the domestic currency and military at the upper layer. He also offered a stronger energy judgment: “The US chose old energy, China chose new energy; the US chose the existing stock, China chose the increment—and historically, the increment is always right.”

6. Trump’s current priorities are securing the home front, replacing personnel and ensuring continuity of power

A senior friend of 李丰’s who has lived in the US for many years and held a senior role at a major company gave him two observations: Trump’s 1-hour-40-minute congressional speech barely mentioned China; and the more appropriate framework is “you must secure the home front before dealing with the outside,” rather than assuming an immediate all-out escalation against China.
The lesson of Trump’s first term was that people he appointed or recommended to the Supreme Court, FBI and other key institutions appeared supportive but, when it came time to execute, “said one thing and did another.” Replacing the defense, FBI, Secret Service and other nodes in the second term is meant to ensure that the reform team is genuinely aligned.
李丰 believes Trump’s external transaction logic is already clear: “Every single thing must be counted.” Whether the issue is diplomacy, war, ideology or economics, whenever the US commits resources, it must receive greater benefits on that issue; but the overall China strategy has not yet fully unfolded.
The deeper layer is future security. If reforms anger large interest groups, Trump must preserve public support and economic results while also ensuring that a successor—presumed to be Vance—can at least protect him; “current-term and mid-term security” therefore constrains personnel purges, judicial adjustments and policy execution alike.

7. Musk is taking political risk without the protection of a successor

李丰 and his friend offered a conditional assessment of Musk: if he does have NPD, his ambition may no longer be to change the auto or aerospace industries but to “save humanity” and change the world through politics. He has no ability to arrange a successor, yet he is someone who has antagonized many people—almost a case of “burning the boats.”
Musk controls a major social platform, Tesla and rocket companies, making him difficult to remove outright within the current system; but the government can stop awarding contracts to the rocket company or investigate old matters. 李丰’s judgment is that wealth accumulation involves commercial competition, government contracts and policy influence: “If you really want to turn someone over, you can probably find problems; the difference is only who controls the investigation.”

8. US global retrenchment and near-shore expansion form a single strategy

USAID, overseas military deployments and global affairs may all be loss-making projects in Trump’s transaction-by-transaction ledger. 李丰 compared the retreat to Britain’s post-World War I contraction of its sphere of influence: when a great power can no longer afford an oversized footprint, it first reduces its distant presence.
The civil and military value of the Panama Canal is easy to understand, while Greenland looks random; but if Mexico, Canada and Greenland are connected on a map, together with the Atlantic and Pacific they form a more complete strategic buffer around North America. Resources are an add-on; geographic defense unifies the demands.
李翔 compared it with the US before World War I: relatively “hands-off” globally, at most promoting the Open Door, but pursuing a Monroe Doctrine in the Americas by strengthening the order around its neighbors through conflict with Mexico, supporting a local coup in Panama and controlling the canal. The conclusion is “overall external retrenchment, regional peripheral expansion,” not two contradictory moves.

9. Biden-era employment resilience depended on government spending and cheap immigrant labor

When the two previously broke down US employment reports, they found that new jobs after mid-2023 were concentrated first in education and healthcare, followed by construction day labor and temporary hotel, restaurant and fast-food work. Many of these positions came directly or indirectly from government spending.
Their estimate at the time was that around 30% of the relevant jobs were filled by undocumented immigrants who had obtained work permits. These were mostly low-paid, demanding service jobs for which local workers had limited willingness, so government spending and immigrant labor supply happened to fill each other’s gaps.
许倬云 described the post-pandemic cycle in 《天下格局》 based on 60 years of observing the US: more people were unwilling to work and instead collected benefits, while society still needed cheap service workers, leading to the admission of more undocumented immigrants; cheap services then made it more sustainable to “live reasonably well without working.”
李丰 calls this a small negative cycle: larger government input did not raise the willingness or efficiency of production, but created more ancillary service jobs that then depended on immigrants. The mechanism explains America’s superficially strong consumption and employment while exposing its dependence on fiscal spending and imported labor.

10. Spending cuts, immigration restrictions and tariffs together make stagflation more dangerous than a simple recession

Trump’s significant cuts to government spending would first reduce full-time government jobs and weaken the temporary and low-paid positions attached to education, healthcare and other systems; sharply reducing illegal immigration would then remove the labor available to fill those jobs, producing simultaneous declines in employment and new job creation.
A shrinking labor supply does not guarantee a simple rise in unemployment, but it will make cheap services such as care, restaurants and healthcare scarcer. “Tips will become more expensive” is merely the most visible symptom; everyday mass-market services would face fresh price pressure.
Tariffs create a second inflation channel on the goods side: imports become more expensive, and domestic substitutes may adjust prices upward as well. Goods and services would then come under pressure simultaneously, while fiscal contraction and weaker employment slow growth, producing “economic stagnation plus inflation.”
李丰 said they had discussed the stagflation risk of Trump’s policies as early as around October 2024, and judged at the time of recording that the US was “very close to this situation.” This is a conditional scenario, not a certain forecast; the core risk is that fighting inflation and sustaining growth begin to conflict.

11. Ideological contamination distorts the narrative, while prices and corporate behavior provide another set of evidence

李丰 warned that most US media do not support Trump and that event coverage is often “painted over” with political positions. 李翔 summarized the dilemma with a remembered line from Rubin: “Everything is ideology except bond prices.” 李丰 added that behind the bond market is the world’s money.
A CEO survey from a meeting 李翔 recounted showed executives broadly selecting war as the world’s biggest risk and describing the economy as full of uncertainty; when asked to assess their own companies, almost everyone predicted strong performance—“everyone thinks I can beat the world.”
Macro statements from people such as JPMorgan CEO Jamie Dimon therefore reflect both economic judgment and enormous vested interests. 李丰 even viewed market volatility since last August as a possible signal that interest groups were expressing dissatisfaction, while explicitly acknowledging that the specific groups involved were “impossible to see clearly.”

12. After $4T evaporated in the US, China’s failure to follow lower became a watershed test

The figures 李翔 cited at the time of recording were that US equity market capitalization had probably shed roughly $4T since Trump’s inauguration, while the 5 billionaires attending the inauguration had collectively lost around $200B; Tesla then fell 15% in a single day and the major indexes approached a 4% decline.
李丰 therefore treated the next day’s Chinese market as a critical test: if China did not follow lower after a super-sized US selloff, it at least showed that some form of rebalancing had emerged in the contest between the two markets. China did not simply replicate the US decline, but 1 day provides a signal, not proof of structural decoupling.
The market decline could also be a short-term risk premium caused by tariff reversals. 李翔 retained the reassurance offered by policymakers: if the tariff framework becomes clear around Apr. 2, volatility might fade; the real question is whether the economy and capital allocation continue to change after uncertainty ends.

13. The previous Hong Kong rally was an intra-Asian reallocation, not yet a China-US capital migration

In the 2 months from the Lunar New Year through the post-holiday period, incremental buying of Hong Kong stocks came not only from mainland Southbound flows but also from foreign investors. Yet the main path 李丰’s team saw was money leaving India, Japan and other Asian or emerging markets and moving into Hong Kong.
Indian equities posted their longest losing streak on record, with foreign investors continuing to withdraw net capital; 李丰 also cited money leaving Japan for Hong Kong. This explained part of the Hong Kong rally, but US equity and bond capital had not visibly shifted into China. At the time, “it was not a reallocation of big money, but a regional reallocation.”
The recent correction in US equities and strength in Chinese assets may bring a broader reallocation into view, but the key is whether it lasts. China had been underweight in global portfolios; even a small rebalancing among China, the US and Europe could involve absolute sums far larger than regional rotation.

14. Real long-term capital is redoing the 10-year “China or America” choice

One estimate 李丰 relayed is that around half of the world’s largest pools of capital are long-term money rather than short-term hedge capital. They must answer an unavoidable question: “Over a 10-year period, who do you choose to win, China or the US?”
The signs he has encountered suggest that this money began reconsidering “whether to choose China to win” in 2024, whereas 2022 was the opposite extreme. “Winning” need not mean mutual destruction; it could mean parity, each side holding its own ground, or a relative configuration similar to that of the US and Japan.
The head of the family office of an extremely prominent Chinese company proactively asked whether they could speak, saying verbatim: “We received instructions from the boss to take another look at China.” This may mean that the office had previously been allocated mainly away from China, and that even large domestic private capital is now reassessing long-term regional weights.
李翔 worried that entering Hong Kong stocks is easy but exiting is harder. 李丰 responded that capital can still move today; what is genuinely scarce is enough scale and growth to absorb enormous sums. Outside China, the US, Europe and Japan, many markets—even if open—cannot absorb hundreds of billions or trillions in capital.

15. Cheap valuations explain a rebound; reassessing 8 years of competitive outcomes may explain reallocation

李翔 framed the question as “cyclical or structural”: if US equities were merely correcting on policy uncertainty and Hong Kong stocks were merely rebounding from excessive undervaluation, there would be no need to change long-term allocations. 李丰 replied that Chinese stocks were cheaper before “9/24” in 2024, yet cheapness alone had not triggered the same reassessment.
Long-term money needs to revisit the 8 years since 2017. When China faced the trade war in 2018 and 2019, its response was hurried, while views at home were divided over negotiation, compromise and confrontation; pessimism reached an extreme in 2022, reinforced by the Russia-Ukraine war, the Israel-Gaza conflict, de-risking and the inability of people to travel and interact.
Counterevidence has also accumulated: the pandemic temporarily increased confidence in China’s supply chain, while visa waivers and renewed exchanges brought back first-hand information. Painful involution also forced some supply to exit; in new energy vehicles, “there aren’t that many players left who can really compete globally apart from Tesla,” forcing foreign capital to recalculate competitiveness based on industrial outcomes.
Europe may further distance itself from the US as transatlantic relations deteriorate, but whether it can truly become independent is another question. 许倬云’s time scale is that the US transformation since the 1970s and 1980s has lasted roughly 40 years; even a strong government would need a long time to reverse it, and whether the US system can complete such a reversal is more uncertain.

16. Every link in the dollar cycle is being weakened by Trump’s transaction-by-transaction accounting

李丰’s simplified model starts with global demand for dollars: US deficits perform the function of exporting dollars, as countries sell goods to the US and receive dollars without immediately bringing all of them back to buy American physical goods.
Those dollars return through America’s vast markets for stocks, bonds, derivatives and different risk tiers of financial assets. The money comes back to buy financial assets, much as China once “buried money in houses,” keeping it in asset prices rather than directing all of it into physical consumption and manufacturing to generate inflation.
Another part of inflation is absorbed by low-cost labor in China and other emerging economies: workers put in longer hours but receive only a fraction of developed-country wages. Alliances, military power, finance and the dollar system then jointly maintain the cycle, forming a carrot-and-stick system.
Tariffs obstruct the exchange of goods, the pursuit of a US net gain on every transaction undermines deficit-driven dollar exports, and global retrenchment weakens the guarantees of order. “When all the variables are working, you can draw the circle; once several of them are removed, what it turns into is the difficult question today.” De-dollarization may be one reaction, but the end state cannot be derived statically.

17. China’s economic structure has moved from needing banks to needing capital markets that can absorb losses

The Two Sessions produced no clear upside surprise overall; the real signals were in policy implementation. The securities regulator subsequently proposed 6 areas of work, including emphasizing capital-market stability and ensuring sufficient capacity, room, policies and tools to handle abnormal volatility. 李丰 noted that it would not directly write “regularized IPOs,” because China had never formally announced that IPOs would be non-regularized.
25 years ago, manufacturing expansion, infrastructure and property required bank loans, leading to AMCs, the restructuring of the 4 major asset-management companies, strategic investors, IT infrastructure, equity financing and city-commercial-bank reform. Today the target is high-value-added companies with high R&D intensity, early losses and dense talent requirements—businesses banks are poorly suited to finance.
A fifth listing standard will therefore inevitably appear. 李丰 compared it with Nasdaq allowing companies with losses or even no revenue to list in 1971. China, meanwhile, emphasizes combining industrial innovation with technological innovation, making companies—especially industry leaders—the main actors in application-side technology innovation, while basic research and major breakthroughs remain the responsibility of national laboratories and major research institutes.
The NDRC proposed a venture-capital fund with a 20-year term focused on early-stage, small and technology companies, potentially reaching RMB1T in scale. The funding structure 李丰 tracked was that China’s government bonds had an average duration of roughly 14 years last year; part of the new 20-year ultra-long special treasury bonds could become the fund’s “core,” with leverage used to match additional capital.

18. The real advantage of personal capital is concentration and patience; frequent trading wastes both

After 李丰 said on a program in early 2024 that China’s capital market was “severely and excessively undervalued,” listeners pressed him on where his own money was. He ultimately invested on Mar. 18. According to 李翔, the market was already nearly 10% above its low when he funded the account, so he did not pick the bottom; 1 year later, the return was far above the expected annualized return.
李翔 asked from an observer’s perspective: “The market rose from 2600 to 3300—what do you have to complain about?” 李丰 compared it with the period around 1999-2000, when commercial housing policies had just been introduced and prices then fell for 2.5 years: a RMB100K property in Beijing bought at RMB2K-3K per square meter then might be worth more than RMB2M-3M today.
The first advantage individuals have over institutions is the ability to concentrate holdings. 李丰’s offshore personal account can allocate 30%-35% to a single stock, while RMB products may cap positions at 20% and balance them across sectors; concentrated portfolios can indeed rise much more than balanced ones when they select high-quality, high-beta names, but they also carry greater volatility risk.
The second advantage is that the time cost is almost nothing beyond comparing the position with 1.6%-1.7% bank interest. One CEO bought Tesla at RMB300 and sold at around RMB400, earning roughly 40% in under 4 months. 李丰 acknowledged at the same time that most retail investors “go crazy” after a 20% drawdown; by switching positions frequently, they destroy the advantage of being able to hold indefinitely. That was precisely the drawdown tolerance 李翔 had asked about earlier.

19. The value of macro analysis is not in hot takes, but in connecting scattered events into a causal chain

李丰 dislikes closed-door strategy meetings that create an atmosphere of “only I know this.” He believes the real task is not identifying who leaked internal information, but recognizing which links connect the CPI explanation, agricultural tariffs, US-Canada tensions, capital flows, listing rules and long-term money.
He recommends 许倬云’s 《天下格局》 and 《资本五千年》: the former examines long-term China-US-Europe structures through economics, religion, politics, philosophy and universal values; the latter uses concrete stories to trace finance’s role in human history. Both should be read “with a question in mind”; otherwise they become lively but superficial exercises, like reading reportage.
The statistics bureau’s itemized explanation of CPI demonstrated the method: it not only told readers what happened, but also “why it happened, where it came from, what it was related to last year, and what it was related to this year.” 李丰’s conclusion is that macro ability means continually finding these connections and testing them against markets and reality, rather than chasing ever more obscure hot takes.

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