China - Sentiment Tracker: Widening K-shaped Growth: Looking Beyond April Air Pocket

研报英文原文证据摘录

China - Sentiment Tracker: Widening K-shaped Growth: Looking Beyond April Air Pocket

Idea

May 24, 2026 09:45 PM GMT

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

Chief China Economist

Widening K-shaped Growth: Robin.Xing@morganstanley.comJenny Zheng, CFA +852 2848-6511

Economist

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

Looking Beyond April Air Pocket Zhipeng Cai

Zhipeng.Cai@morganstanley.com +852 2239-7820

April growth reflected the oil shock and fiscal complacency, but Harry Zhao

broader Q2 data support our structural narrative: domestic EconomistHarry.Zhao@morganstanley.com +852 2239-7229

demand is lagging, but high-end manufacturing and exports are

holding the line. Oil is the key swing factor between two-speed

resilient growth and continued downward pressures.

Weaker-than-expected April activity data across the board seems at odds with our

slightly constructive Mid-Year Outlook, where we raised growth and inflation

forecasts on the back of global AI and energy capex supercycles. The key question is

not just whether April was a one-off miss, but also whether a distinctly two-speed

economy can deliver stable growth and narrow reflation. In this note, we assess the

latest tracking data through this two-speed lens and explain why our base case still

holds, albeit with oil as an even more critical swing factor.

April growth weakness - dual squeeze from oil and faded fiscal impulse: The oil

shock is not just a terms of trade one that compresses domestic income - hitting

consumers when confidence is already low - but also a volume constraint on

production. As it is, capacity utilization for several petrochemical industries have

slumped since March ( Exhibit 2 and Exhibit 3 ). An equally important incremental