China: High-tech sectors cushion broader slowdown – ING

FXStreet Insights Team FXStreet

According to ING’s Lynn Song, Chinese industrial production growth slowed more than expected in July but remains relatively resilient compared with other domestic indicators. Manufacturing and high-tech manufacturing continue to outperform, with strong gains in electronics, rail, aerospace, robotics, NEVs and semiconductors. Traditional property and infrastructure-linked sectors such as cement, steel and flat glass remain weak, reflecting the ongoing property downturn.

Upgrading and external demand support industry

"Industrial production rose 4.5% YoY in July, slowing from 5.3% in June and falling short of forecasts for a smaller moderation (market: 5.0%, ING: 5.0%). This brought year-to-date industrial production growth to 5.3% YoY, slightly lower than the 5.4% recorded in the first half, but still relatively resilient compared with other domestic activity indicators."

"Manufacturing continued to outperform the headline, growing 5.5% YoY in July, while high-tech manufacturing accelerated to 16.9% YoY, up from 14.1% in June. This reinforces the structural theme that China’s industrial growth is increasingly being driven by industrial upgrading and high-tech manufacturing, the strategic priorities for the country."

"The product-level industrial production data also point to continued strength in new economy sectors. Industrial robots rose 30.2% YoY, new energy vehicles rose 29.9% YoY, and semiconductor integrated circuits rose 20.7% YoY, This supports the view that the industrial cycle is being increasingly supported by robotics, semiconductors, NEVs and higher-end manufacturing."

"In contrast, traditional property and infrastructure-linked sectors remained weak. Cement output fell -11.6% YoY, steel products fell -4.1% YoY, and flat glass declined -3.6% YoY, underscoring the continued drag from the old property and construction-related industrial cycle."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

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FXStreet Insights Team

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