As the initial year of the 15th Five-Year Plan period unfolds, the midpoint of 2026 offers a moment for assessment. Despite a complex and volatile international landscape, the Chinese economy has maintained overall stability, consistently demonstrating its resilience, and is on track to deliver a mid-year report card highlighting positive momentum and quality improvements.
Expert analysis of the macroeconomic trends for the first half of the year indicates that the current Chinese economy is characterized by new growth drivers taking a leading role in production and external demand exhibiting stronger-than-expected resilience. Concurrently, a clear divergence between old and new growth drivers is apparent as the economy undergoes continuous transformation. On one hand, the accelerated development of the AI industry is solidifying a foundation for growth in industrial production and foreign trade exports. On the other hand, domestic industrial upgrading is enhancing supply capacity in emerging sectors.
New Growth Drivers Take the Lead
Evaluating the Chinese economy requires looking beyond aggregate figures and scale changes to focus on structural optimization and quality enhancements.
According to the latest data from the National Bureau of Statistics, from January to May, value-added of industrial enterprises above designated size and the service industry production index increased by 5.4% and 4.8% year-on-year respectively, maintaining relatively rapid growth.
On the investment front, although the year-on-year growth rate of national fixed-asset investment for the first five months showed a decline, investment in emerging industries achieved rapid growth. From January to May, investment in high-tech industries grew by 4.5% year-on-year, while investment in intellectual property products increased by 9.3%.
In terms of consumption, the total retail sales of consumer goods and services for the first five months rose by 2.8% year-on-year. A closer look at the detailed data reveals the continuous release of new demand, with new energy vehicles, high energy-efficiency appliances, and smart products becoming increasingly favored by consumers. Retail sales of wearable smart devices, including smart glasses, surged by over 100%.
Simultaneously, China's foreign trade grew robustly. In the first five months, the total value of goods imports and exports increased by 15.3% year-on-year. Notably, exports of mechanical and electrical products, which have higher technological content and added value, accounted for over 60% of the total, serving as the primary driver of export growth.
It is noteworthy that in May, value-added of high-tech manufacturing enterprises above designated size grew by 15.1% year-on-year, accelerating by 2.3 percentage points from April. In the first five months, high-tech manufacturing contributed nearly 40% of industrial growth. Meanwhile, sustained growth in high-end manufacturing investment is building momentum for the upgrading and development of the manufacturing sector, with investment in high-tech manufacturing rising by 3.4% year-on-year from January to May.
An expert noted that China's industrial structure is undergoing continuous optimization and upgrading. The electronics and information technology sector, AI computing power equipment, and related industrial chains remain the primary supports for manufacturing recovery. However, performance in traditional and downstream industries remains relatively weak, indicating that structural divergence within the industrial sector is still pronounced.
"The Chinese economy is still in transition, which means new growth drivers like AI and high-end manufacturing are gradually replacing old drivers such as real estate and infrastructure," another analyst explained. From an industry perspective, production, investment, and exports in AI, integrated circuits, and new energy vehicles are performing significantly better than in sectors like real estate, home appliances, furniture, and fuel-powered vehicles.
Policy Measures Gaining Momentum
Influenced by factors such as uneven recovery in domestic demand and the high base effect from previous consumption policies, the second quarter may see a phase of deceleration in domestic economic growth. However, the long-term trend of the Chinese economy shifting towards new and higher-quality structures remains unchanged, and the core logic of new growth drivers underpinning economic development is still solid.
Regarding second-quarter GDP growth, one expert anticipates it may moderate to around 4.7%. Another research team suggests GDP growth will show a pattern of first declining then rising from the second to the fourth quarter, with full-year real GDP growth reaching 4.7% and nominal growth hitting 5.8%.
A chief economist observed that in the first half of 2026, China's macroeconomic performance exhibited a mild recovery trend, providing a basis for observing potential policy adjustments in the latter half of the year.
"From a medium- to long-term perspective, the driving forces of the Chinese economy are undergoing a quiet transformation, with the economic structure gradually upgrading and transitioning towards lighter, more advanced models," an expert commented.
Based on the current economic situation, recent policy signals have been intensively released to stabilize growth and promote transformation, accumulating policy momentum for a steady economic recovery.
On June 5, a State Council executive meeting emphasized the need to grasp the trends of the new round of technological revolution and industrial transformation, adhere to the directions of intelligentization, greening, and integration, and coordinate efforts to upgrade traditional industries, develop and expand emerging industries, and plan for future industries.
On June 16, the head of the National Development and Reform Commission stated in a meeting that the next steps would involve strengthening the planning and construction of key infrastructure networks, enhancing coordinated advancement, efficiently utilizing various government funds and new policy-based financial instruments, ensuring land, environmental impact assessment, and other factor guarantees, prioritizing both quality and efficiency to accelerate implementation and generate more tangible progress.
On the same day, a spokesperson for the National Bureau of Statistics indicated the need to deeply implement actions to boost consumption, take multiple measures to promote employment and income growth for residents, continuously innovate consumption scenarios, optimize the consumption environment, and better unleash consumption potential.
"While macroeconomic policy continues to leverage the pulling effects of exports and manufacturing investment, expanding domestic demand should be placed in a more prominent position. Only when supply and demand achieve dynamic balance at a higher level can economic operations sustain a recovery and upward trend, laying a solid foundation for a good start to the 15th Five-Year Plan period," an expert stated.
Another analyst believes the foundation for stable economic operation in China remains solid: first, new growth drivers in production continue to develop; second, export resilience remains strong; and third, there is still room for equipment renewal, urban renewal, new infrastructure, and livelihood-related investments. Regarding the direction for future policy efforts, they suggest that on the consumption side, the focus should shift from short-term stimulus to "stabilizing income, stabilizing expectations, and promoting new consumption scenarios." On the investment side, greater emphasis should be placed on "effective investment" and "boosting confidence among private capital."
A chief economist forecasts that fiscal policy will be strengthened in the second half of the year, which is expected to help investment stabilize and cease its decline.
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