Pivot to high tech leads investment, while Chinese consumers prioritize experiences over shopping

Chinese economic statistics released this week beat analysts’ expectations, driven by an uptick in investment as well as domestic consumption. But the overall economic picture is not a simple story of broad-based recovery.

Drilling down beneath the headline data shows how some of China’s old growth drivers are fading, while new ones are gaining traction: high tech, services and China’s own overseas investment.

Real-estate-related investment remains weak, while selected advanced manufacturing segments continue to show resilience. We’ve selected aerospace as an example in our first chart: even at its slowest pace in the past 2 1/2 years, investment in this sector was increasing at a 16%-plus year-on-year pace, even surpassing 50% in mid-2024. Meanwhile, real-estate investment has been in negative territory since 2022.

Higher-end manufacturing is generally growing more quickly than the industrial norm in China. Our second chart illustrates this trend for high-tech goods, equipment and digital products.

Meanwhile, on the consumption side, the data supports a shift toward more “experiential” spending, such as travel and dining. (This is consistent with our analysis of China’s New Year spenders.) Sales of consumer goods remain relatively subdued, as our third chart shows.