Everything You Should Know About China's Economy on Friday (July 31)
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CIAO THERE. This is TIAN in Beijing.
In today’s Everything You Should Know About China’s Economy:
— China's non-manufacturing PMI drops to 49 in July.
— China's manufacturing PMI drops to 49.2 in July.
— China unveils five-year plan for greener industrial development.
— China's computing power networks to see 4 trln yuan in new direct investment during 2026-2030.
DRIVING THE NEWS, the purchasing managers’ index (PMI) for China’s non-manufacturing sector came in at 49 in July, down from the previous month’s 50.2, official data showed on Friday.
The sub-index for business activity in the construction sector stood at 47 in July, dropping from 49 in June, according to data released by the National Bureau of Statistics.
The sub-index for business activity in the broad service sector declined to 49.3 in July from 50.4 the previous month. Among service industries, the PMI readings for postal services, telecommunications, broadcasting and satellite transmission services, as well as culture, sports and entertainment, remained in the high prosperity range of above 55, the data revealed.
As an indicator of macroeconomic trends, a PMI reading above 50 indicates expansion while a reading below 50 signals contraction.
The new orders index for the non-manufacturing sector declined last month, indicating a reduction in market demand. Specifically, the readings for the construction sector and service sector stood at 40.1 and 45.2, respectively.
However, the business activity expectation index for the construction sector rose to 51.8 in July, up from 51.1 in June, while that for the service sector came in at 56, unchanged from the previous month, the data showed.
MEANWHILE, the purchasing managers’ index (PMI) for China’s manufacturing sector stood at 49.2 in July, down 1.1 percentage points from June, official data showed on Friday.
A reading above 50 indicates expansion, while a reading below 50 reflects contraction.
“Factors include a relatively high base from the rapid manufacturing growth in the previous period and the traditional off-season for production in some manufacturing industries,” said Huo, a chief statistician with the NBS.
Despite the overall decline, equipment manufacturing and high-tech manufacturing continued to play a supporting and leading role, with their PMI readings at 51.4 and 53.3, respectively, significantly higher than the manufacturing sector as a whole, she noted.
General equipment, computer and communication electronic equipment industries saw both production and new orders indices above 53 percent, indicating relatively high market activity and fast growth in production and demand, Huo added.
“Enterprises are generally optimistic about market development,” Huo said, citing the sub-index for production and business expectations this month, which came in at 54.1.
In particular, the sub-indices spanning the manufacturing sectors of food, wine, beverages and refined tea, as well as railways, shipping, aerospace and equipment, exceeded 60 percent, reflecting stronger confidence in near-term development, according to the statistician.
IN ADDITION, China has released a five-year plan to advance the green and low-carbon transformation of its industrial sector, setting a target of peaking carbon dioxide emissions from industry by 2030.
The plan for the 2026-2030 period, recently issued by the Ministry of Industry and Information Technology (MIIT), also aims to significantly increase the use of green energy in industry and further strengthen the competitiveness of green and low-carbon sectors.
It sets goals including cutting energy consumption per unit of value added by major industrial enterprises by more than 10 percent and establishing 500 zero-carbon factories during this period.
A range of key tasks are outlined, such as implementing industrial carbon peaking initiatives, expanding the supply of green equipment and products, strengthening green and low-carbon technological innovation, and improving industrial resource recycling systems.
Among specific measures, China will build green computing facilities in regions with abundant renewable energy resources, accelerate technological upgrading and application expansion in key sectors like new energy vehicles, new energy equipment and new-type energy storage, and expand the use of clean, low-carbon hydrogen in the industrial and transport sectors.
According to an MIIT official, further efforts will be made to strengthen coordination between industrial policies and those related to energy, science and technology, fiscal affairs and finance.
The ministry will also formulate regulations on the recycling and utilization of retired power batteries, complete the formulation or revision of 500 industrial green and low-carbon standards, and improve incentive mechanisms to encourage green consumption, the official said.
ALSO ON FRIDAY, China’s computing power networks are expected to receive 4 trillion yuan (589.2 billion U.S. dollars) in new direct investment during the 15th Five-Year Plan period (2026-2030), an official with the country’s top economic planner said.
As computing power development relies mainly on enterprise investment, such development will create enormous room for private investment, Jiang Yi, spokesperson for the National Development and Reform Commission, told a press conference.
China is mulling massive investment in a “Six Networks” initiative as the country works to expand domestic demand and stabilize economic growth.
These six networks comprise water networks, new-type power grids, computing power networks, next-generation communication networks, urban underground pipeline networks and logistics networks.
Jiang said the six networks are not separate systems operating independently, but an integrated whole featuring deep interconnection, mutual empowerment and coordinated support.
During the 15th Five-Year Plan period, about 5 trillion yuan is expected to be invested in underground pipeline networks to accelerate efforts to address weaknesses in gas, water supply and drainage, and heating infrastructure, while enhancing the resilience of urban infrastructure and improving people’s quality of life, Jiang said.
In the first half of this year, water network construction attracted more than 10.8 billion yuan in private capital, up 85.8 percent year on year. More projects with stable operating returns will be launched to encourage the participation of private enterprises, according to Jiang.
Construction of the six networks is speeding up, with policy dividends continuing to be unleashed, Jiang noted.
IN TODAY’S FINANCIAL MARKET,
Chinese stocks closed higher on Friday, with the benchmark Shanghai Composite Index up 0.72 percent to 3,832.26 points.
The Shenzhen Component Index closed 2.21 percent higher at 13,578.93 points.
The combined turnover of stocks covered by these two indices stood at 2.54 trillion yuan (about 374.11 billion U.S. dollars), up from 2.34 trillion yuan on the previous trading day.
Electronic information, ceramics and medical device shares led the gains, while stocks related to finance, liquor, and pesticides and fertilizer, suffered notable losses.
The ChiNext Index, tracking China’s Nasdaq-style board of growth enterprises, gained 3.06 percent to close at 3,343.96 points on Friday.
The STAR Composite Index, which reflects the performance of stocks on China’s sci-tech innovation board, closed 3.69 percent higher on Friday at 1,819.9 points.
China’s central bank makes Announcement on Open Market Operations No.147 [2026]
Chinese yuan weakens to 6.7894 against USD Friday
The central parity rate of the Chinese currency renminbi, or the yuan, weakened 2 pips to 6.7894 against the U.S. dollar Friday, according to the China Foreign Exchange Trade System.
In China’s spot foreign exchange market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day.
Hong Kong’s Hang Seng Index closes 0.1 pct higher
Hong Kong’s Hang Seng Index market ended higher Friday with the benchmark Hang Seng Index up 0.1 percent to close at 25,884.43 points.
The Hang Seng China Enterprises Index dipped 0.38 percent to end at 8,612.15 points, while the Hang Seng Tech Index ticked up 0.53 percent to 4,829.22 points.
China’s benchmark interbank gold prices lower Friday
According to the China Foreign Exchange Trade System, the benchmark price for gold that is 99.95 percent pure or above stood at 878.45 yuan per gram, down 1.30 yuan from the previous trading day.
The price for gold that is 99.99 percent pure or above was down 1.29 yuan from the previous trading day to 880.69 yuan.
AT THE END OF TODAY’S SHARING, LET’S TAKE A LOOK AT YOUR DAILY FUTURES:
Sugar futures closed lower Friday in daytime trading on the Zhengzhou Commodity Exchange (ZCE).
The most active sugar contract for September 2026 delivery lost 44 yuan (about 6.48 U.S. dollars) to close at 5,053 yuan per tonne.
On Friday, the total trading volume for six listed sugar futures contracts on the ZCE was 605,960.0 lots with a turnover of 31.0 billion yuan.
Cotton futures closed higher Friday in daytime trading on the Zhengzhou Commodity Exchange.
The most active cotton contract for September 2026 delivery gained 20 yuan (about 2.95 U.S. dollars) to close at 15,745 yuan per tonne.
On Friday, the total trading volume for six listed cotton futures contracts on the ZCE was 426,658.0 lots with a turnover of 34.03 billion yuan.
About the Newsletter:
Run by TIAN Dongdong, this newsletter features daily and trustworthy content on China’s economy. Having worked in Brussels, London, Cairo, and Tripoli for Chinese media as correspondent for several years, TIAN is now based in Beijing.