Industrial production rose 4.5% YoY in July, slowing from 5.3% in June and falling short of forecasts for a smaller moderation (market: 5.0%, ING: 5.0%). This brought year-to-date industrial production growth to 5.3% YoY, slightly lower than the 5.4% recorded in the first half, but still relatively resilient compared with other domestic activity indicators.
Manufacturing continued to outperform the headline, growing 5.5% YoY in July, while high-tech manufacturing accelerated to 16.9% YoY, up from 14.1% in June. This reinforces the structural theme that China’s industrial growth is increasingly being driven by industrial upgrading and high-tech manufacturing, the strategic priorities for the country.
Looking at the outperforming sectors, strength remained concentrated in high-tech manufacturing sectors. On the VAI side, computer, communication and other electronic equipment rose 19.1% YoY, making it the strongest major sector, followed by rail, ships and aerospace (13.6%), and special equipment (12.6%).
The product-level industrial production data also point to continued strength in new economy sectors. Industrial robots rose 30.2% YoY, new energy vehicles rose 29.9% YoY, and semiconductor integrated circuits rose 20.7% YoY, This supports the view that the industrial cycle is being increasingly supported by robotics, semiconductors, NEVs and higher-end manufacturing.
In contrast, traditional property and infrastructure-linked sectors remained weak. Cement output fell -11.6% YoY, steel products fell -4.1% YoY, and flat glass declined -3.6% YoY, underscoring the continued drag from the old property and construction-related industrial cycle.