On November 26, the dollar index strengthened while the yuan depreciated. The performance of A-shares was lackluster, with a noticeable decline in market activity and transaction volume. Investor anxiety surrounding US-China trade relations partially explained the fluctuations in the A-share market. Recently, President Trump publicly announced plans to impose a 25% tax on goods from Mexico and Canada, and an additional 10% tax on Chinese imports. This announcement, although intimidating in tone, was actually more favorable than earlier predictions, which had anticipated a 60% tax on China compared to 10% for other countries.

However, it is currently implausible for the US to impose a 60% tax on China. Such drastic measures would only burden American consumers, as the initiative to bring manufacturing back to the US remains mostly theoretical. Increasing tariffs significantly would ultimately result in higher costs for American consumers, leading to potential backlash.

At present, tariffs on Chinese goods imposed by the US are around 20%, and these do not cover the main export items. Therefore, raising the tariff by an additional 10% would bring the total tax rate on Chinese goods to 30%. While this may create some pressure, American consumers can tolerate a slight increase in tariffs, and the depreciation of the yuan could offset some of these costs, allowing Chinese manufacturers to maintain competitive pricing. Thus, the psychological pressure regarding the stock market exerts more influence than any concrete repercussions.

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I previously expressed that when Trump suggests raising taxes, we should not impede him. By taxing all countries, he is inadvertently working towards an isolationist dream, while China can strategize a new approach to globalization. The term “China” originates from the Qin dynasty, which unified the six states through wise diplomatic tactics. If China maximizes its ability to navigate international relationships, it will eventually see the US reduced to a state reminiscent of the Qing Dynasty.

In light of this unfolding scenario, how should investors navigate an increasingly anti-globalization climate? This requires careful consideration. My recommendation is to focus on consumer stocks within A-shares and search for avenues for domestic consumption growth. There are two categories of consumer stocks to examine: one focuses on tangible products, wherein I suggest investing in luxury items such as premium liquor and specialty teas that are likely to experience significant growth in the future. The other category consists of service goods, particularly content creation platforms.

Today, A-shares introduced a new term: "millet economy," referring to the burgeoning market around peripheral products associated with anime and gaming. Collecting these items is a passion for many young individuals. This interest is not a modern phenomenon; those of us born in the 70s and 80s recall our own childhood obsessions with collectible cards and images. Recently, younger generations have been captivated by blind boxes and capsule toys, resulting in a surge of retail stores dedicated to such merchandise, essentially operating as thematic anime shops, selling figures, badges, and toys.

From a microeconomic perspective, the millet economy can be categorized as part of the fan economy surrounding intellectual property (IP). Previous discussions surrounding consumer trends have highlighted this aspect, but the rapid shifts in popular toys lead me to advise investors against chasing fads like millet economy stocks. Instead, investors should pursue publicly traded companies that possess well-developed content IP. The flourishing markets of millet and short drama economies share a common foundation in content IP, predominantly thriving through online literature platforms.

Tencent stands as the most successful company in operating IP in China. WeChat's acquisition of Yuewen enables Tencent to draw inspiration from its extensive library of online literature, which cascades into various media formats, including animated adaptations, live-action dramas, video games, and merchandise, creating a seamless profit-generating process at every stage.

This fluid process not only matures the existing IP but also ensures profitability for many companies in the supply chain. The millet economy is merely the last step in a vast content IP production line and lacks intrinsic value. Similarly, the short drama economy originated from ByteDance's Tomato Novel.

Whether focusing on short drama or millet economies, the emphasis should always be on content IP. Given that IP is crucial, investors must shift their attention to companies holding valuable IP. In theory, the financial returns from IP creation should benefit the creators; however, current platforms dominate profit-sharing, which means that while creators may not achieve significant wealth, platforms tend to reap the rewards.

Of course, it is essential to note that some businesses possess IP but lack effective monetization strategies, rendering their IP futile. Tencent remains the standout example; despite criticisms about its significant market capitalization and perceived lack of taste, holding onto Tencent stock presents a favorable long-term investment opportunity.

From a macroeconomic standpoint, the future of China's economy will display two significant characteristics:

The first defining characteristic is that domestic demand will gradually replace foreign demand, as structural adjustments render low-end exports unsustainable alongside rising wages.

The second characteristic is that the service industry's growth rate will surpass that of the manufacturing sector. Numerous creative industries will emerge rapidly. In Japan, these are referred to as ACG, while in China, we categorize them as short drama economies, live-streaming economies, and millet economies, among others. Although the forms differ, the underlying concept remains the same, grounded in creativity.

As we enter the age of humanoid robots, the automation and intelligence levels of manufacturing facilities will increase. Solely relying on manufacturing for employment growth is inadequate. Therefore, it is essential for local governments to shift their belief that developing the manufacturing sector equates to fostering a robust economy. The transformation of Chinese industries is inevitable, and during this transition, investors need to proactively adjust their focus from tangible goods to creative industries, software sectors, and content-driven enterprises.