China Outlook Amid AI And Industrial Supercycle

Morgan Stanley's China economics team frames the outlook around an AI and industrial supercycle. Exports remain the main support for headline growth, while domestic demand stays subdued and deflationary pressure persists, producing a two-speed economy. Asia is poised for its strongest industrial cycle since the mid-2000s, and China's global export share is expected to rise to 16.5% by 2030. The report estimates that Industry 5.0 and AI could unlock about US$12trn of additional industrial capex over the next decade (roughly Rmb80trn cumulatively), lifting industrial margins, potential GDP and global manufacturing share;