China’s export-facing sectors are cushioning weak domestic demand, with GDP growth at 4.7 per cent in H1 2026, as per Fitch Ratings.
Advanced manufacturing, technology supply chains and artificial intelligence investment remain key supports.
Trade frictions, tariff risks and slowing global demand are the main uncertainties for sourcing and supply-chain planning.
Artificial intelligence-related investment is also supporting activity across computing infrastructure, data centres and electricity supply.
Domestic-facing sectors continue to operate in a challenging environment. Household spending remains constrained by soft labour-market conditions, weak confidence and the ongoing property correction, while private investment is still subdued.
Excess capacity and intense competition are weighing on pricing power and margins across many domestic-facing sectors. Weaker income expectations and continued property-market weakness are also eroding household confidence and increasing caution in consumption and investment.
The macro-financial environment remains broadly supportive, with accommodative monetary conditions, targeted fiscal support and continued management of capital flows helping contain volatility despite heightened geopolitical uncertainty and higher energy costs. External resilience remains a key uncertainty.
The rating agency added rising trade frictions, tariff risks and slowing global demand could test the sustainability of external growth, while any narrowing of the external growth cushion would increase pressure on domestic demand and policy support to sustain activity.
Fibre2Fashion News Desk
