China Insights

China’s growth is stabilising through manufacturing, exports and technology investment while weak household demand and property continue to constrain the economy.

• Retail sales are expected to grow by 1.7 per cent year-on-year in the second half of 2026, while real estate investment fell 21 per cent and new home sales area declined 13 per cent in the first nine months.
• Policy support is moving toward households through a one percentage point mortgage-interest subsidy for eligible first-time buyers and a 2026–30 consumption plan targeting around RMB60 trillion of retail sales by 2030.
• Fixed asset investment fell 7.2 per cent, while investment in intellectual property products rose 9.3 per cent and information transmission infrastructure increased 31 per cent.
• China’s equity recovery is concentrated in technology and export-linked industries. Second-quarter earnings growth reached around 24 per cent year-on-year, overseas revenues rose 23 per cent in the first half, and exporter earnings increased by around 80 per cent.
• Industrial profits rose 16 per cent from January to August, led by computers, communications and electronics at around 110 per cent, while automobile profits fell 16 per cent and ferrous-metals profits dropped 62 per cent.
• RMB assets are supported by an independent monetary cycle and currency strength. The offshore renminbi gained almost 5 per cent against the US dollar this year, while CNH credit outstanding increased from RMB266 billion in 2021 to around RMB1.14 trillion.

Takeaway: Investors should focus on technology, manufacturing, export-linked companies and selected RMB bonds while treating property and household-demand sectors cautiously, since the recovery remains dispersed rather than broad-based.