China Outlook Amid AI And Industrial Supercycle

Morgan Stanley Chief China Economist Robin Xing presents the China outlook amid AI and industrial supercycle. The economy is two-speed: resilient exports but weak investment and consumption, with narrow reflation. Asia is likely to enter its strongest industrial cycle since the mid-2000s, not just in AI/tech, with a broad-based recovery in non-AI exports. China holds a dominant share in global manufacturing value-added, and its global export market share is expected to rise to 16.5% by 2030; however, as industry becomes more capital-intensive and automated amid lingering excess capacity, export spillover to employment and domestic demand may be milder than before. September–October targeted easing (PSL rate cut, larger relending quota, policy-bank tools, mortgage subsidy and fiscal bonds) may cushion the downside but is unlikely to break the deleveraging trap;