Economists and executives say stronger fiscal and monetary follow-through, alongside reforms and AI-led investment, could help offset weak domestic demand, property softness and uneven growth drivers.
China’s top leadership has signaled more policy support for the second half of the year as the economy navigates a difficult handoff from traditional growth drivers to newer sectors such as artificial intelligence and the smart economy. After a July 30 meeting of the Political Bureau of the Communist Party of China Central Committee, presided over by Xi Jinping, general secretary of the CPC Central Committee, economists said the policy message points to a more proactive fiscal stance, an appropriately accommodative monetary policy, and a greater push to raise employment and household income so consumption and private investment can recover. The economy grew 4.7 percent year-on-year in the first half, supported by exports and industrial production, while growth slowed to 4.3 percent in the April-June quarter. Demand at home remains the main weak spot: retail sales stayed soft, fixed-asset investment contracted, and July’s official manufacturing PMI (purchasing managers’ index, a factory activity survey) fell to 49.2, indicating contraction as market demand weakened. Analysts including JPMorgan’s Zhu Feng and CITIC Securities’ Ming Ming said faster fiscal execution, bond issuance and use of the 800 billion yuan policy-based financial tool could help stabilize investment, while additional monetary easing may be needed later if inflation pressure eases. New growth drivers, from high-tech manufacturing to the digital economy and modern services, are contributing more than 40 percent of growth, and international institutions including Moody’s Ratings and Goldman Sachs remain cautiously constructive.