Awaiting Policy Fine-tuning: China - Sentiment Tracker | Asia Pacific

Research evidence excerpt

Awaiting Policy Fine-tuning: China - Sentiment Tracker | Asia Pacific

Idea

June 28, 2026 10:00 PM GMT

Morgan Stanley Asia LimitedMChina - Sentiment Tracker | Asia Pacific Robin Xing

Chief China Economist

Awaiting Policy Fine-tuning Robin.Xing@morganstanley.comJenny Zheng, CFA +852 2848-6511

Economist

Jenny.L.Zheng@morganstanley.com +852 3963-4015

We expect Beijing to step up a capex-centric fiscal rollout Zhipeng Cai

starting in 3Q, primarily focused on Al and power grids rather EconomistZhipeng.Cai@morganstanley.com +852 2239-7820

than consumption. Harry Zhao

Growth tracking: final demand still on moderating path Harry.Zhao@morganstanley.com +852 2239-7229

• High-end manufacturing moderates but remains solid: Emerging industries

PMI (EPMI) edged down to 52.2 ( Exhibit 1 ), bringing the YTD average to

52.2, but still higher than the 51.0 average during 2024-25.

• Exports likely resilient: EPMI new orders stabilized at 53.1 ( Exhibit 2 ), vs.

YTD average of 52.1 and a 2024-25 average of 51.1. Container throughput

growth has slowed to ~3%Y in May and June ( Exhibit 3 ). We do not think it

necessarily points to weaker exports, in view of the higher concentration of

tech exports that are shipped by air.

• Domestic demand continues to soften. Secondary housing transactions

softened again ( Exhibit 11 ), consistent with our property analyst’s view that

the earlier rebound was not sustainable. Holiday travel during the Dragon

Boat Festival continued to point to “strong footfall but weak wallet

conversion” ( Exhibit 5 ). Passenger car and online home appliance retail

sales are largely in line with seasonality sequentially, but their YoY growth

remains pressured by a high base ( Exhibit 4 ). On the bright side,

construction activity improved marginally ( Exhibit 14 ).