K-Shaped Divergence: Thoughts on Current Economy and Policy (Zhongtai Macro)

English summary

### K-Shaped Divergence: Thoughts on Current Economy and Policy (Zhongtai Macro) Time: 2026-07-31 07:23:55 Content: Authors: Yang Chang, Xia Zhifei. Report abstract: China's economy currently shows a certain 'K-shaped divergence': on the production side, high-tech manufacturing and traditional industries continue to diverge in growth rates; on the profit side, earnings concentrate in emerging sectors; on the demand side, 'silicon-based consumption' diverges from traditional 'carbon-based consumption'; AI hardware exports grow rapidly while real estate chain and labor-intensive exports are relatively weak. Reviewing the Internet Revolution (US), the Second Industrial Revolution (US), and the First Industrial Revolution (UK), K-shaped divergence is a common pattern of general-purpose technology revolutions: in the early stage of new technology commercialization, terminal demand explodes, capital floods into emerging tracks, forming divergence at production, capital market, and income distribution levels. However, the convergence paths after K-shaped divergence differ: (1) At the capital market level, 'clearing-style' convergence often occurs, triggered by the exposure of the gap between demand extrapolation narratives and actual cash flows, and the process is relatively fast;…