China High-Tech Manufacturing Grows 13.3% in First Half of 2026 as New Drivers Exceed 40% of Growth

The shift between old and new growth drivers is accelerating, with China's economy showing a pattern of "newer drivers and an improving structure." First-half data show that new drivers contributed more than 40% of economic growth, with new industries and new business forms represented by high-end manufacturing, the digital-intelligence economy and modern services playing a key role. The technology dividend has driven notable demand growth: value-added of high-tech manufacturing above designated size rose 13.3% year on year, while AI-related sectors such as integrated circuits and smart vehicle equipment manufacturing maintained growth of more than 30%. Investment in high-tech industries increased 4.6% year on year, contributing 0.5 percentage point to overall investment growth. The "new three" – robots, artificial intelligence and innovative drugs – posted strong overseas sales. In production, investment and exports alike, new economic drivers have become an important force for high-quality development.

At the same time, old drivers remain under pressure, with traditional industries and some small and medium-sized enterprises in an adjustment phase. External uncertainties, compounded by domestic industrial restructuring, have left some small and medium-sized processing enterprises facing the twin pressures of rising raw-material prices and falling finished-product prices. Profit margins have narrowed, and some companies report insufficient orders and cash-flow difficulties. The manufacturing purchasing managers' index (PMI) rebounded to the expansion zone above 50% in June, but the sentiment index for small enterprises remained below the boom-bust line, in contrast to large and medium-sized enterprises. This structural divergence reflects a profound transformation in China's economy, from a development model reliant on high input and high consumption to a new model characterised by digitalisation, intelligence and green development.

The shift between old and new drivers is not a simple replacement of industries but the diffusion of technology across sectors. In the petrochemical and chemical-fibre industries, for example, the biomass fuel processing sector grew 33.0% in the first half of 2026, and the bio-based materials manufacturing sector grew 21.9%, showing that traditional industries can also release new momentum through technological upgrading. As the bedrock of the economy, traditional industries are an important force for sustaining new industries and forming new business forms. Against this backdrop, the meeting of the Political Bureau of the CPC Central Committee held on 30 July explicitly called for "persisting in deepening reform and opening up and accelerating the shift between old and new growth drivers," and made key arrangements for the "six networks" plan and the "artificial intelligence plus" initiative, setting the direction for economic work in the second half of the year.

China's economy is now in a critical period of optimising its structure and switching growth drivers. To consolidate the momentum for "advancement," support for basic research needs to be strengthened and made more stable on the R&D side, while on the application side the cost for enterprises to use computing infrastructure and AI technology should be lowered, helping manufacturing move up the industrial chain. At the same time, comprehensive efforts to address "involutionary" competition and institutionalise the resolution of overdue payments to enterprises will foster a fair and orderly market environment, removing institutional obstacles to the driver transition and reinforcing the foundation for "stability." Overall, the direction of China's economy – towards newer drivers, a better structure and sounder development – remains unchanged.