"China's Growth Rate Expected to Fall Short of Last Year... High-Tech Industries Remain the Pillar"

Hanwha Investment & Securities has assessed that, due to the aftermath of the Middle East war and a delayed recovery in domestic demand, China's economic growth rate this year is likely to be lower than last year. However, the company also noted that growth momentum centered on high-tech industries is expected to be maintained.

According to Hanwha Investment & Securities' macro review released on the 19th, this trend is evident in China’s real-sector indicators for April. Industrial production in China increased by 4.1% year-on-year. While the production growth of private companies slowed (+2.8%), state-owned enterprises also saw a weaker increase (+3.0%). Overall manufacturing production was also subdued, at +4.0%.

However, production of high-tech manufacturing, including computers, showed relatively strong growth with a 12.8% increase. Choi Kyooho, a researcher at Hanwha Investment & Securities, interpreted this as "a result partially reflecting the government’s policy to focus on high-tech industries."

In the same month, retail sales rose by 0.2% year-on-year, while fixed asset investment decreased by 1.6% on a cumulative year-to-date basis compared to the previous year. Researcher Choi stated, "The slowdown in growth continues due to the sluggish recovery in domestic demand. Production in private industries, excluding high-tech sectors, has weakened, and recovery in the service sector and consumer sentiment remains slow." He added, "Concerns about supply chain disruptions stemming from delayed negotiations between the United States and Iran are also increasing short-term growth burdens."

Nevertheless, the assessment is that the medium- to long-term growth engine remains intact, as the Chinese government is striving for qualitative economic improvement by fostering high-tech manufacturing.

Researcher Choi predicted, "As emphasized in the recent Politburo meeting, policy support focused on high-tech manufacturing will continue through infrastructure investment led by advanced technologies." He analyzed, "There is a high possibility that this year’s growth rate will be lower than last year, but the medium- to long-term growth momentum led by high-tech industries will not weaken."

This content was produced with the assistance of AI translation services.