China's Economic Growth Expected to Stabilize Amid Transition in Drivers
Chinese economic experts anticipate stabilization of China’s GDP growth in the second half of 2026 as policymakers intensify efforts to address structural challenges from shifting growth drivers. The Communist Party of China Central Committee, led by Xi Jinping, emphasized a transition toward new industries and proactive fiscal policies during its recent meeting. While high-tech manufacturing sectors have benefited from global AI-related investments, traditional sectors remain sluggish, with domestic demand and private investment still recovering. Economists highlight the need for macroeconomic stimulus to bolster employment and income in order to drive broader growth. JPMorgan’s China chief economist Zhu Feng noted that while new industries like artificial intelligence are likely to support high-tech manufacturing and exports, recovery in retail sales and fixed-asset investments is lagging. In July 2026, the official PMI fell below 50 for the first time in five months, signaling a contraction in factory activity. The People’s Bank of China pledged timely monetary adjustments to maintain liquidity as inflationary pressures ease. Additional fiscal measures and policy-based financial tools are expected to support new infrastructure projects during the upcoming Five-Year Plan period.
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Topics: economic growth fiscal policy monetary policy policy meeting structural challenges