China Outlook Amid AI And The Next Industrial Super Cycle

Morgan Stanley's China macro outlook sees a "two-speed" economy: resilient exports alongside weak investment and consumption, with real GDP growth forecast at 4.6% in both 2026 and 2027, and better but narrow reflation. Asia is likely to enter its strongest industrial cycle since the mid-2000s, with AI only part of the story; AI sovereignty should further reinforce AI capex, and China's global export market share is expected to rise to 16.5% by 2030. However, the positive spillover to the broader economy may be milder this time, as a more capital-intensive and automated industrial sector delivers less employment boost and lingering excess capacity slows the pass-through of export strength to domestic demand. Policy remains supportive but with no rush to stimulate;