Tracking industrial risks: Industrial credit de-risking trend intact supported by healthy total demand and rational investment growth

Research evidence excerpt

Tracking industrial risks: Industrial credit de-risking trend intact supported by healthy total demand and rational investment growth

Update

July 3, 2026 10:45 AM GMT

Morgan Stanley Asia Limited+MChina Financials | Asia Pacific Richard Xu, CFA

Equity Analyst

Tracking industrial risks: Richard.Xu@morganstanley.comChenqian Liu +852 2848-6729

Research Associate

Chenqian.Liu@morganstanley.com +852 3963-0359

Industrial credit de-risking trend Chiyao Huang

Chiyao.Huang@morganstanley.com +852 3963-4624

intact supported by healthy Beryl Yang

Beryl.Yang@morganstanley.com +852 3963-2224

total demand and rational

investment growth

Key Takeaways China Financials

Asia Pacific

Total industrial production accelerated to 9.6% yoy growth in May, while May Industry View Attractive

YTD manufacturing FAI remained muted, which should lead to accelerated risk

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reduction.

China's 3D Journey – Financials: Assessing the

This is also supported by healthy YTD manufacturing profit growth of 20% yoy in cost of supporting ongoing industrial upgrades

May, while single-month growth slowed to still healthy 13.2% yoy. (21 May 2024)

Export growth accelerated to 19.4% yoy in May from 14.1% in April, with a slight China Financials: Earlier-than-expected NIM

production growth pick-up - VAI rose 4.5% yoy vs. 4.1% last month. rebound and decline in overcapacity risk (25

May 2026) MoM PPI growth eased to 0.5% from 1.7% last month; YoY growth further picked

China Financials: Tracking industrial risks: still to 3.9% on a low base.

healthy profit growth and reduction of

May YTD manufacturing FAI fell 0.4% yoy, mostly on a high base (+8.5% in May

overcapacity risks despite slower headline

2025 YTD). Industrial liability growth rose to 6.5% yoy vs. 5.9% last month.

macro numbers (3 Jun 2026)