Manufacturing upgrading generates new growth momentum for economy: China Daily editorial

Against a backdrop of rising protectionism, geopolitical tensions and sluggish growth in many Western economies, China's 4.7 percent GDP growth in the first half of 2026 can reasonably be described as a steady performance. It demonstrates considerable resilience in an increasingly uncertain global environment — a resilience attributable to the transition of the growth model to technological innovation, industrial upgrading and domestic demand as the drivers.

Highlighting the improving demand, China's consumer price index rose 0.5 percent year-on-year in July, while the core consumer prices, excluding volatile food and energy, climbed 0.9 percent. Summer tourism and big-ticket spending have helped broaden the consumption recovery. The producer price index also rose 3.5 percent year-on-year in July.

While some indicators softened in May and June, capital and resources are increasingly flowing into industries that are likely to define China's next phase of development. Offline consumption payments rebounded 2.2 percent year-on-year in July, while investment in advanced manufacturing surged 73.1 percent. This is investment in tomorrow's economy.

The high-tech sector is becoming the key engine of the Chinese economy. In the first half of 2026, the value-added output of high-tech manufacturing rose 13.3 percent, outpacing overall industrial growth. Production of industrial robots and lithium-ion batteries maintained double-digit expansion. Developments in artificial intelligence and semiconductors are particularly striking. AI patent authorizations surged 60 percent year-on-year in July, while China's intelligent computing capacity has nearly tripled from a year earlier. Domestic large language models have also surpassed 10 billion downloads globally. Activity indices for semiconductors, new materials and digital intelligence all posted strong gains, signaling that enterprises in these sectors remain highly dynamic.

The global debate is no longer about whether Chinese technology will be influential; it already is. Chinese companies are becoming major players across many sectors where global demand is growing rapidly — such as electric vehicles, batteries, solar panels and advanced manufacturing systems. The country is making the transition from being the world's manufacturing base to an innovation center, injecting fresh momentum into global innovation.

While the average surveyed urban unemployment rate stood at 5.2 percent in the first half, the creation of 6.95 million new urban jobs was broadly aligned with annual targets.

The slowdown in second-quarter GDP growth to 4.3 percent indicates that the transition calls for more forward-looking, systematic and targeted policies. Therefore the policy response is increasingly focused on building new sources of productivity rather than reviving the old ones. The government is placing greater emphasis on new quality productive forces and increased investment in human capital.

The development of the "six networks" — water, power, computing, communications, underground utilities and logistics — reflects an effort to strengthen the infrastructure underpinning a more technologically sophisticated economy. Planned investment in new power grids alone will exceed 5 trillion yuan ($741 billion) during the 15th Five-Year Plan (2026-30) period. Meanwhile, endeavors to balance high-quality development with high-level security are accelerating, including refining AI governance frameworks and deepening global cooperation on technology standards.

For some developed economies, treating China's technological rise primarily as a "threat" to be contained obscures a more important reality: China's competitive advantages are no longer based simply on cheap labor. They increasingly combine superlarge market scale, rapid industrial deployment, comprehensive supply chains and narrowing technological gaps.

China's imports and exports of goods rose 16.9 percent in the first half of the year. It is now a major trading partner for over 160 countries and regions, with increasingly diversified imports, according to the General Administration of Customs of China — evidence that the country's economic vitality continues to create opportunities for global partners.

China's economy resembles a "steppe horse" capable of galloping on a long journey. It may not be the fastest sprinter at every moment, but its stamina matters. The fundamentals underpinning China's long-term positive economic trajectory remain unchanged. The underlying conditions — solid foundations, multiple advantages, strong resilience and immense potential — remain firmly in place. China is not merely weathering the external uncertainties; it is upgrading its economic structure and growth model for decades ahead.