Soochow: Policy incubation of deep-sea technology trillion-level market, multi-dimensional value blue ocean track.

Soochow released a research report suggesting to focus on three major sectors: marine general equipment, resource extraction, and equipment manufacturing. The bank believes that (1) marine general equipment: as a rigid demand for deep-sea development, there is certainty in short to medium-term performance realization; (2) resource extraction: core resource demands and strategic imperatives leading to rapid EPS realization; (3) deep-sea equipment manufacturing: long-term benefits from deep-sea development, deep-sea infrastructure and defense equipment needs, benefiting from long-term valuation enhancement. Key points from Soochow are as follows: Deep-sea technology made its first appearance in the government work report, possessing multidimensional value. On March 11, 2025, China's government work report for 2025 clearly stated the promotion of commercial aerospace, low-altitude economy, and deep-sea technology among emerging industries. Deep-sea technology was highlighted as a national development key focus for the first time with many regions actively responding to the policy call. Deep-sea technology has strategic value in resources, military, technology, and economy across multiple dimensions: (1) Resources: Deep-sea oil and gas have value in various resource extraction areas such as minerals, biology, and space; (2) Military: Deep-sea resources are located in international waters, intensifying global competition for deep-sea resources and accelerating militarization in deep-sea regions; (3) Scientific research: The last "natural laboratory" on Earth for critical research into life origins, geological evolution, and climate change; (4) Economy: China's marine economy exceeded 10 trillion yuan for the first time in 2024, growing by 5.9% year-on-year. The deep-sea economy is expected to become a vital engine for future economic growth. The industry chain covers basic materials to high-end equipment manufacturing, with the core as the "Three Deep" system. From an upstream and downstream perspective, deep-sea technology covers basic materials, high-end equipment manufacturing, and downstream applications. (1) Upstream: includes basic materials and core components such as special/basic materials, sensors, electronic devices, energy, and power systems; (2) Midstream: includes deep-sea equipment manufacturing and system integration; (3) Downstream: various deep-sea applications including resource exploration and exploitation, deep-sea observations, and national defense security. From a technological perspective, deep-sea technology's core "Three Deep" system consists of deep diving, drilling, and networking: (1) Deep diving includes manned and unmanned submersibles; (2) Deep networking is based on sensors, underwater Siasun Robot & Automation, and underwater fiber-optic infrastructure; (3) Deep drilling utilizes drilling ships and equipment for seabed resource exploration and academic research, presenting the most significant challenges within the "Three Deep" system. The deep-sea-related sectors include deep-sea resource development, deep-sea equipment manufacturing, and deep-sea offensive and defensive systems. (1) Deep-sea resource development in the downstream: a path with strong certainty, resource development closely related to China's actual and strategic needs. Deep-sea mineral extraction has significant prospects: oil and gas resources as of the end of 2024, China's deep-sea oil and gas reserves accounted for 67% of the national total resources, with an extraction rate of less than 10% and a high dependency on external resources, indicating enormous development potential; mineral resources in 2022, China's strategic metals nickel, cobalt, and lithium had external dependency rates of 93%, 98%, and 63% respectively. The US and Europe explicitly identify China as a competitor in mining strategies, with China potentially facing greater external risks in acquiring overseas mineral resources, making deep-sea mineral extraction imperative; deep-sea biological resources according to related institutions, the global marine biotechnology market reached 6.78 billion US dollars in 2024, estimated to reach 13.59 billion US dollars by 2034, with significant advancements made by China in deep-sea biological laboratories and other areas. (2) Deep-sea equipment manufacturing: a four-stage, three-step process aiming to establish a preliminary and comprehensive deep-sea equipment system by 2025; to build a technology and equipment system integrating advanced deep-sea large manned equipment and intelligent unmanned systems at a world-class level by 2030; and to achieve lineage development and industrialization of deep-sea equipment by 2035. (3) Deep-sea offense and defense: With the increasingly tense international geopolitical situation, China's border defense in deep-sea areas, starting with the South China Sea, has raised higher requirements for the construction of deep-sea offensive and defensive systems. The modern underwater offense and defense system covers multiple subdivisions including mobile equipment, fixed equipment, and deep-sea infrastructure. Currently, China's military underwater unmanned equipment and underwater observation networks have yet to form mature industrial chains in several subdivisions. Risk Warning: Policy implementation and landing below expectations, technological breakthroughs falling short, slow progress in product commercialization, and heightened global geopolitical risks.