China’s new economy sectors—including information technology, business services, AI, and advanced manufacturing—have delivered robust performance, helping offset weakness in traditional industries. In the first half of 2025, GDP growth reached 5.4% in Q1 and 5.2% in Q2, keeping the country on track to meet its full-year target of around 5%.
Meanwhile, conventional sectors such as heavy manufacturing and commodities have experienced cooling demand. Exports have slowed, industrial output growth has weakened, and retail sales along with fixed-asset investment have underperformed. However, digital services, AI solutions, semiconductors, smart devices, and automation technologies have continued to expand, reinforcing the overall economy.
The government has actively promoted this shift. Policy incentives, targeted funding, and trade-in programs for appliances and communication equipment have stimulated demand in key sectors. China has also installed more than half of the world’s industrial robots in recent years, boosting efficiency and productivity across new economy industries.
Despite these gains, challenges remain. Consumer confidence is fragile amid job market uncertainty, and credit conditions continue to constrain small and medium-sized enterprises. Analysts caution that overreliance on emerging sectors could create imbalances if traditional industries are neglected, potentially affecting regional economies and employment stability.
To maintain growth momentum, China needs to strengthen domestic demand, improve financing options for private firms, and implement policies that support structural transformation. Successful execution of these measures could make the new economy the backbone of sustainable growth, even as older sectors adapt to changing market conditions.
If these strategies succeed, China could achieve a more balanced and resilient economic model, with innovation-led industries compensating for slower performance in traditional sectors and reinforcing long-term competitiveness.
