Link: https://www.straitstimes.com/asia/east-asia/chinas-economy-slows-exposing-widening-divide-between-exports-and-domestic-demand

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The world’s second-largest economy is becoming increasingly bifurcated with exports and manufacturing, especially in high-tech sectors linked to artificial intelligence, continuing to underpin growth, while property, consumer spending and investment remained weak.

Economists describe this widening divergence as a “K-shaped” economy, with some cautioning that the stronger, export-driven segment may not be broad enough to offset the persistent weakness across the rest of the economy.

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AI-related products such as chips, computers and power equipment were among the biggest contributors to China’s export growth.

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Rising external risks, sluggish domestic demand, a weak labour market and a prolonged property market downturn have continued to weigh on the economy.

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Fixed-asset investment is a key gauge of spending on long-term assets like infrastructure and property, and is widely viewed as an indicator of business confidence and future economic activity.

The property sector remained a major drag on growth as real estate investment dropped 18 per cent in the first half of the year compared with 2025, extending a prolonged downturn that has weighed on consumer confidence and strained local government finances despite some pockets of improvement in the larger Chinese cities.

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