Steps to spur consumption, enhance vitality

A State Council executive meeting presided over by Premier Li Qiang on Thursday called for stepping up efforts to improve the effectiveness of macroeconomic policies, while arranging the implementation of interest subsidies on personal consumption loans and loans to service sector businesses to better stimulate consumption and enhance market vitality.

As the country's latest step to boost innovation-driven growth, the State Council executive meeting approved a guideline on deeply implementing the AI Plus initiative, calling for promoting the large-scale, commercial application of artificial intelligence and advancing its accelerated adoption and deep integration across various fields of economic and social development.

On Thursday, the National Bureau of Statistics released the latest purchasing managers index, or PMI, data, which suggested the necessity to consolidate the resilience of the manufacturing sector and overall economic momentum in the second half of the year.

Economists called for further reinforcing support for domestic demand and employment, as the nation's manufacturing activity cooled in July amid unfavorable weather and the traditional off-season. The official PMI for the manufacturing sector stood at 49.3 in July, down from 49.7 in June, the NBS said on Thursday.

Despite the moderation, high-tech manufacturing continued to gain traction in July, highlighting the vitality of the country's industrial upgrading and reinforcing the sector's ability to withstand ongoing external challenges, experts said.

Wang Qing, chief macroeconomic analyst at Golden Credit Rating International, said, "With both domestic and external demand softening, the manufacturing PMI ended its two-month rebound and declined within the contraction territory in July."

The official manufacturing PMI has stayed below the 50 mark that separates expansion from contraction for the fourth consecutive month. In July, the subindex of new orders — a barometer of market demand — dropped to 49.4 from 50.2 in June, while that of new export orders went down to 47.1 from 47.7 in the previous month.

External headwinds dampened export momentum, while the effect of earlier policies to boost domestic demand started to wane in July, Wang said, adding that high temperatures, heavy rains and flooding in some regions disrupted production.

Downward pressures on economic growth may intensify in the third quarter, said Wang, who expects additional measures to boost domestic demand as China's relatively low levels of sovereign debt and inflation have offered ample policy room to offset a slowdown in external demand.

The Political Bureau of the Communist Party of China Central Committee held a meeting on Wednesday that made arrangements for economic work in the second half, emphasizing that macro policies should continue to exert force and be strengthened at an appropriate time.

New economic drivers

Xiong Yi, Deutsche Bank's chief economist for China, said, "If GDP growth slows faster than expected, a budget deficit increase may become necessary in the fourth quarter."

He said he anticipates that the Chinese economy will grow 4.8 percent in 2025, following its strong resilience in the first half of the year.

According to Xiong, service consumption is expected to become a new driver of economic growth and employment in the second half of the year. China is enhancing its support for service consumption, with a particular focus on cultural tourism, elderly care, healthcare and domestic services.

Despite the overall decline, the PMI for high-tech manufacturing came in at 50.6 in July, while that for equipment manufacturing was at 50.3, the NBS said, indicating the sectors' capability to thrive despite challenges.

For instance, Nantong Haixing Electronics Co, an electronic energy storage materials producer based in Nantong, Jiangsu province, saw its export value exceeding 50 million yuan ($6.95 million) in the first half of 2025, marking a year-on-year increase of 67.23 percent, data from Nanjing Customs showed.

Jin Wenhui, the head of the company's foreign trade unit, said that despite intense worldwide competition, sustained investment in innovation has enabled the company to pursue industrial upgrading and remain resilient in a rapidly evolving global landscape.

Guangdong Greenway Technology Co, a manufacturer of electric motorcycles and bicycles, as well as mobile energy storage systems, based in Dongguan, Guangdong province, shipped its products to more than 80 countries and regions across Europe and the Americas in the first half of the year, according to Huangpu Customs in Guangdong.

Wu Jing, head of the company's foreign trade unit, said, "With years of development in lithium battery manufacturing, we've steadily increased our supply of high-quality, eco-friendly products amid the global shift toward energy transition, while actively exploring new markets and opportunities overseas."