Ji Mo: Energy+Talent+Manufacturing Decode the Triple Dividend of Chinese Technology from Quantitative to Qualitative Change

On December 3, the “10th Zhitong Financial Capital Market Annual Conference” was grandly opened in Shenzhen. Ji Mo, Managing Director and Chief Chinese Economist of DBS DBS Bank (Hong Kong), shared a keynote speech entitled “Global Macro Outlook: From Quantitative to Qualitative Change” to thoroughly interpret the underlying changes in the global macroeconomy.

Ms. Ji Mo predicted that in 2026, the US will face a double share debt, unraveling the triple core driving forces of interest rate cuts, consumption, and AI (although there are technical adjustments but the general direction is correct). It also points to investment keys where the US dollar is slightly weak and gold needs to be overbalanced due to global risks; and unlocking the core password of China's technological development — the triple dividend of energy, talent, and manufacturing. Chinese technology has changed from quantitative to qualitative. She also raised the profound proposition of “the end point of human development” in the context of the explosion of the robotics industry. The whole process was full of interesting stories and worth exploring in depth!

The transcript is as follows:

The triple drive of the Federal Reserve's interest rate cut+economic growth+AI development supports the US stock market

First, what is the next global trend? This trend will continue to guide all investment decisions not only in 2026, but also in 2027 and 2028.

Let me first talk about what people in the US were most concerned about in '26, or some of the things that directly affected everyone's investment.

The first thing is the Federal Reserve. The current chairman of the Federal Reserve is probably Hassett, the current chairman of the White House Council of Economic Advisers. Powell will leave his job on May 15. Hassett himself has not been officially announced yet; it is likely that the core of his being selected is because of his loyalty to Trump. This means that the market has now begun pricing, and the US can cut interest rates three times next year.

The Federal Reserve actually only thinks it can cut interest rates twice. If he takes office, it is likely that it will drop at least three times, or how many basis points. Whether it will cut interest rates by 50 basis points, 75 basis points, or 100 basis points next year, it is likely that the US will continue to drop interest rates next year.

Is this good or bad for the stock market? If the US economy is good, then cutting interest rates is good for the US stock market. This is the first judgment. So will the US economy do well next year? Now the US itself also has a dualistic economy. On the one hand, the poor are poor in every way except for the minimum wage. According to the latest Thanksgiving Black Friday sales data, both the number of visitors and total sales volume have increased by about 3%-9% over last year.

It shows that everyone is very willing to spend and has strong purchasing power. Why do I say it reflects the dualistic economy? Middle-income earners, including the wealthy, are very willing to spend. What happened in 2025 is that wealthy Americans are traveling to Europe at a record high. But the lives of America's poor are getting worse. On average, the consumer confidence index in the US is declining, but it does not represent the full picture of the consumption of the US economy as a whole.

I just mentioned that cutting interest rates will be the mainstream next year. Second question, we need to clearly see how the US economy is going next year? The first factor depends on consumption. Consumption is good when supported by people with middle income and above.

Second, more than 60% of America's current GDP, or more than two-thirds, is determined by US scientific and technological innovation. This is determined by the AI infrastructure construction we usually talk about. Therefore, next year will still be a big year, which means that the US economy will be sufficient to support America's GDP growth next year, whether in terms of consumption or investment. This means that America's GDP will definitely rise next year as well.

When interest rates are cut and the economy is relatively good, the US stock market will rise next year. This is a basic judgment.

Third question, will America's AI bubble burst next year? There are plenty of indicators that can help us make a decision. Are we still in the first year of AI, or have we reached the end of AI? The conclusion is obvious; it must still be at the so-called “beginning of the beginning.” As a start, it will definitely have technical adjustments.

The midterm elections are a very important question for the US in the current market. How much will the turnout be at that time? We have seen that the Democratic Party has taken key states not only in New York City, New Jersey, Florida, etc., but Virginia. The Republican Party is about to start a counterattack.

The result of the backlash is likely to discourage many people from voting. Therefore, the results of next year's US midterm elections are uncertain. It's not that the Democratic Party will win; it is possible that many people didn't vote. This also directly affects the 2028 US presidential election.

The US presidential election had the worst outcome. What is likely to happen in 2028? At that time, if Trump was still healthy and capable of carrying out his duties, would he use some non-peaceful means to prevent the US presidential election from taking place? What are the consequences of obstruction? That is, he can be re-elected.

So I think when considering this, everyone should include this kind of pricing possibility. I recently attended a forum in Hong Kong. Everyone talked about America's risks next year.

To sum it up, the US will cut interest rates next year, and the economy will be OK next year. Even with technical adjustments to AI, the general direction is right. America's midterm elections next year are uncertain. Because of the midterm elections, Trump will instead be very hopeful that the US stock market will be good. Therefore, any policy is biased towards improving the US capital market.

Finally, what are America's risks next year? AI is a risk. Another risk, I think, could be Trump's health problems. When he was interviewed on “Air Force 1,” he said that the results of the nuclear magnetic resonance examination were “completely normal” and that no head problems were detected, etc. But is this kind of health problem also a factor that needs to be calculated? The US head of state may have faced disease problems in the last two terms, and there may also be a risk of being replaced. Let's imagine the biggest risk next year. If personnel turmoil occurs at the top of the US government, whether all existing situations will change drastically.

Of course, we know that AI investment will not change in this place; will everything else change? This is also a very important point that we need to pay attention to when considering the entire US market next year.

Next year, the US may double in equity bonds, and the dollar weakens slightly

The five factors we have just discussed about the US are all talking about US stocks, but US debt is also very important. Recently, Japan's Japanese bonds were sold at a major drop in price. Will this have an impact on US debt? This goes directly back to the first topic I want to talk about today. In 2020, there was an outbreak around the world. In March 2020, I gave a speech on the topic “Looking for certainty in the midst of uncertainty.”

Since that time, it has been used over and over again throughout the market. The most important point I was talking about at the time was the US 10-year treasury bond. From about 2% to about 1% at the time, the whole market thought it would rebound; it would go back to 3% and 4%. But I thought at the time that it could go back below 1% and reach a new low in 100 years. The facts proved me right.

Why did I make such a firm decision at the time? It will also directly affect our judgment on America's so-called 10-year treasury bonds next year. The 10-year treasury bond is the most sensitive signal in the entire market, and everyone must pay attention to it.

The first thing I just mentioned is will Japan's recent decline in treasury bonds have an impact? What will have an impact is America itself. America's real treasury debt fell from 4.5% this year to 4.088% today. The decline is now 50 basis points, or about 4%. Will next year's ten-year treasury bonds go up or down? How far will the downside fall? Treasury bonds themselves mainly reflect the strength and weakness of the US economy itself. If the US economy is relatively good next year, treasury bonds should not decline too much.

So is there any further downward pressure on treasury bonds? At this point, it doesn't depend on the US itself, but on foreign countries. The overseas factor is just as important. In 2020, both Japanese bonds and German bonds were negative at the time. Why did US debt have to go up rather than down when it was above 1%?

This was the most important core logic for my judgment at the time. Up to now, we know that Japanese bonds and German bonds are not negative; they are positive numbers. If it is under downward pressure, there is also downward pressure on US debt.

Therefore, I think that as a 10-year treasury bond of the United States, it is unlikely that it will rise upward. It is quite possible that it hovers around 4 and descends. This is a core judgment.

Also, I recommend that everyone keep in mind a piece of data. This is what Bezent himself said. According to their estimates, the US government's financing costs have become very important because of its high debt.

For every increase in US 10-year treasury bonds, from 4.5 to 4.51, the US government has to spend an additional 100 billion US dollars in financing costs. This is a very important point. What everyone should know is that the US government is unwilling to increase its national debt. When the name of Hassett, who is likely to be the new chairman of the Federal Reserve, appeared publicly, US Treasury bonds fell that day.

This reflects everyone's confidence in him. They think he won't be particularly aggressive and won't ignore America's current inflation. As a judgment on US Treasury bonds itself, I think it is important for the entire capital market next year, because there will be a linkage between stocks and bonds. Will the US be a “double bull in stocks and debt” next year, or “bulls in stocks and debt bears”? I think America will be in a state of both stocks and debt next year.

Then let's look at the dollar. The US dollar fell by about 9% or 10% in total this year, the worst in the world. The US dollar experienced a structural depreciation cycle. In this structural depreciation cycle, will the US dollar still depreciate next year? I think it's probably true, will it depreciate as much as this year? Probably not.

Even though the US dollar is the world's reserve currency, it still reflects the relative strength and weakness of the US economy itself. The US dollar has taken into account all previous adjustments this year. If the adjustments are in place, next year I will think that the US dollar will have some adjustments, but it is only a “relatively weak dollar”; it is a slight, relatively weak dollar.

Risk aversion still exists, maintaining an excess of gold

We just talked about US stocks, US debt, and the US dollar. Let's take a look at gold. As for the target price forecast for gold, 4,000 US dollars is long past; now we are discussing when it will reach 8,000 US dollars and 10,000 US dollars. I think if the world is still in turmoil, gold must be a very important means for everyone to diversify their asset allocation, whether it is a sovereign fund, central bank, institution, or individual.

I can share a story with you. I know someone. He has known Bezent for a long time. Bezent gave advice and support to Trump. In fact, it didn't start recently, but he already began mentoring Trump when the Capitol Hill arson incident occurred.

Bessent, who has an educational background at Princeton University, said he discovered that the crisis in the Roman Empire was caused by unlimited and disorderly expansion. In fact, America is shrinking. As a result of the contraction, the US allows wars to take place in places other than the US, and the US can instigate wars outside the mainland. So I think now we've seen Trump implement this kind of strategy throughout the year, including during his campaign. This means that the risk of war around the world will continue to increase during the next three years of his term.

This means that gold, as a safe-haven asset, will definitely be overallocated by everyone. It's not just about allocating to maintain performance in line with market benchmarks; at the same time, I want to do as many overruns as possible to ensure that the return on investment is rewarding.

Changes in consumption patterns influence investment direction

I just talked about US stocks, US debt, US dollars, and gold. Today I would like to focus more on some themes as we look at global macroeconomics and investment.

From 2020 to 2023, I was talking about “looking for certainty in the midst of uncertainty.” Because we experienced the pandemic back then, and now the pandemic is over, one thing is certain in the process — after experiencing the pandemic, the average health level of everyone in the world is lower than before the pandemic. This is something we all must be aware of. When your average level of health declines, you'll rethink the way you work and spend.

That's why we've seen changes in consumption itself. Changes in overall consumption patterns not only in China and the US, but also in other countries around the world. Not a consumption of food, but a consumption of pleasure. So everyone sees that now young people are willing to buy milk tea, and they are also more willing to spend 1,000, 2000, or 3,000 yuan to buy concert tickets instead of buying a physical product. The decline in the global average level of health was confirmed after experiencing the pandemic. Because of this change in consumption patterns, we should pay special attention to in our investments.

The triple dividend of energy, talent, and manufacturing creates qualitative changes in China's technology

Second, the 2024 epidemic is finally over. But at that time, when we chose our investment targets, we just kept up with the changes. At that time, we were not only experiencing the Russian-Ukrainian war; at the same time, we also knew that the US political situation might change. Under these circumstances, it is probably important that we anchor the future industry. So far, what's most important in 2025? Including 2026, after experiencing games and changes in the past eight or three years between China and the US, China now has some changes from quantitative to qualitative.

When the amount of technology has accumulated to a certain extent, we are now essentially different. This is also one of my recent thoughts. About three years ago, I mentioned energy. At the time, I thought that because of technological innovation, we need energy centers, so we must do this kind of energy support. Recently, there have been many reports talking about the world's problems caused by energy centers. I talked about this three years ago.

What am I going to talk about now? Not only is our country not in a position of relative energy shortage, but we are beginning to have an energy dividend. This is an important support for future scientific and technological innovation. I think now, from a global perspective, China may have an advantage over the US to a certain extent. You can take a look at the energy sector. One is energy production, and the other is energy storage.

This is why everyone is talking about the importance of energy storage. After it is generated, it must be stored. At the same time, like our original demographic dividend, it can really help technology become important. Recently, everyone has discovered that we need water resources to produce energy on the ground. When this is not possible on the ground, can exploration be directly carried out in space? This is something that companies such as Nvidia are studying recently.

Second, the talent dividend is what everyone originally called the demographic dividend in China. The talent dividend is the dividend that everyone has been talking about for engineers in recent years. I think engineers are incomplete; they should include scientists as well as engineers. Our question is, why is China starting to see a talent dividend now? If more than 40 years have passed since college entrance examinations began and recovered in '77 and 78, it would probably be two generations.

Among these two generations, whether they are in their early 30s, 40 or 50, especially people like DeepSeek who have never gone abroad for training, this talent dividend is beginning to appear in China. What kind of scenario will this talent dividend occur in? Let me give you an example. Just like when DeepSeek was launched on January 15 of this year, there was an uproar all over the market.

I asked a person who is very good at PE in Shenzhen. He has listed 150 companies in the past 20 years. I asked him if you knew when DeepSeek showed up at the time? He said he didn't know. Therefore, our talent dividend will only shorten the cycle of the emergence of our technology in the future. Because China has finally accumulated so many scientists and so many engineers, there is now a so-called blowout talent explosion.

Third, what I want to talk to you about today is also the most central one, the dividends produced. Whether it was England, the 1920s, the US in the 40s, including later Japan, etc., their manufacturing industry had a brilliant time. Later, due to globalization, global factories flocked to wherever they were cheap to manufacture.

China is now finally beginning to see a situation where the dividends in the manufacturing industry are beginning to show in a big way. Everyone is likely to say that when we look at the Made in China 2050 plan, we thought we were talking big words. But now the dividends of the Chinese manufacturing industry have covered the entire industrial chain. We drew up a plan because we have the ability to manufacture, we can make it; and because we have made it, we can take our technology one step further. There is a positive cycle between the two.

I think today's China is a time when the three dividends of energy dividends, talent dividends, and manufacturing dividends are showing at the same time, and that is why we will make such progress in the field of science and technology. I think in the past, every time people mentioned Chinese technology, they would say China, “AI isn't working now” and “it's not good in this area.” So let me show you, where exactly is China OK and where is it not?

There are about 64 of the most critical technologies in the world. Among these key technologies, the US had about 60 in 2003-2007, while China only had 3 at that time. The data updated from 2019 to 2023 (there isn't any data for 25 years here, but I think it's definitely more than this). Of the 64 items, China now has 54 core technologies, and the US is currently leading only 7. Among these 7 items, there are AI and quantum computing that everyone is most concerned about.

We can also take a look at these high-impact research results statistics. China's most powerful focus is mainly on energy and the environment. There is no doubt about this. We all know that China has invested a lot in this area, including the manufacture of high-end materials. This is what I just mentioned. China not only has energy dividends and talent dividends, but more importantly, manufacturing dividends. We can design this kind of high-end material, and the most important thing is that we can make it. This is the core. So whether it's military industry, aerospace, or robotics, China is now also very ahead in these areas.

Let me give you an example, such as “sense” perception. In March of this year, when Tsinghua had the pleasure of meeting with the president of Tsinghua University, he talked about brain-computer interface issues. Musk has Neuralink, Neuralink is embedded. At the time of the exchange, the Tsinghua principal said that we have already begun large-scale clinical trials. What we do now is not only embedded, but also touch and wireless. We already have 3 methods and are undergoing large-scale clinical trials. This is the real data that everyone is seeing.

Let's take a different perspective and take a look at where exactly the US is leading the way. We have just mentioned 7, namely high-performance computing, advanced integrated circuits, natural language, quantum computing, vaccines, small satellites, and space launch systems.

Let's look at China the other way around. If we take the high-end materials manufacturing industry as an example, China's technology is very advanced in nanotechnology material manufacturing. Nano coatings, including terminal applications, are leading.

I want to tell you one thing, that is, once we discover that technology is already in a monopoly state, it is possible that our industry will have an overcapacity problem. Therefore, as investors, we are looking for all the highlights every day, specifically in technology, because in our future lives, we will discover that in these sub-industries that are in the so-called medium state, China will now have a blowout in the future. Because we are supported by energy dividends, talent dividends, and manufacturing dividends.

The US now wants the manufacturing industry to return. There has been no success in the past four years. Even if it accelerates in the next three years, it will take time to build a complete industrial chain. So I think when studying how to invest next, we can focus more on areas where competition is still at a moderate level of monopoly.

There is still room for growth in Chinese consumption

Let's talk about my judgment on the current future global situation. The world is competing for consumer centers, manufacturing centers, and technology centers. Global consumption centers are directly dependent on each country's own level of consumption. Currently, the total volume of the global consumer industry is about 80 trillion to 90 trillion US dollars, and there is still room for growth in China. Global manufacturing. The Chinese manufacturing industry accounts for about 30% to 32% of the world, and the overall scale is about 16 trillion to 17 trillion US dollars. China's consumer industry is roughly one-quarter of the global level.

By 2050, China's manufacturing industry is likely to account for 50% of the world. At that time, the US manufacturing industry was probably less than 10% of the global level. If so, can China make so many products, and will so many people consume them? So that's why I want to end today with this judgment — when we created so many robots, it wasn't a “human economy,” but rather a “robot economy.”

Our manufacturing industry produces so many robots. On average, a person can have 20 robots to serve him. Under such extreme circumstances, humans may just enjoy the services of robots every day, so where is our end? This is a topic I left for everyone. Everyone can think about it in the next 20, 30, and 50 years. Thank you all.