中国经济：26H2展望：AI超级周期切入K型经济

China Economics 26H20utlook:AlSupercycleCutsintotheK-shapedEconomy CITI'STAKE XiangrongYuc+852-2501-2754xiangrong.yu@citi.com Alisnowfrontandcenter inChina'sK-shapedeconomy.TheAl supercyclefurtherpowersthestrongleg-exports,productionandtheneweconomy.Meanwhile,Al-drivenjobdisplacementweighson consumerconfidence,andthesignificantAlbuildoutriskscrowdingoutold economy investment.Overall trickle-downhasbeen limited,withtheweaklegfragmentingintodistinctwinners and losers across sectors andgeographies.Policywill likelystaytargetedagainstthisbackdrop.Wemaintainour4.7%growthforecastfor2026E,with26Q2likelythelowpoint.TheJulyPolitburo shouldsignalpiecemeal consumersupport-notbroad-based stimulus,inourview.Anoutright deficit expansion is not our base case,but webelieve fiscaldeployment is setto accelerate.Whilemonetarypolicyisnot in thedriver'sseat,wekeepourcallforasymbolic10bpsratecutin26H2E XinyuJiAc+852-2501-2792xinyu.ji@cit.com Yuanliu HuAc+852-2501-2746yuanliu.hu@citi.com SeeAppendixA-1forAnalystCertification,ImportantDisclosuresandResearchAnalystAffiliations. Alhasbecomethedefiningforceshaping China'sK-shapedeconomy.WehavecharacterizedChina'spost-Covidrecovery alongtwodimensions:[1] supplyconsistentlyoutpacingdomesticdemand,withexportsfillingthegap;and[2] theneweconomyoutperformingtheold(see:ChinaQutlook2026:MindtheGap).TheDeepSeekmomentinearly2025helpedmateriallyacceleratetheAl-centricneweconomy,whichhassincebroadeneditsmacrofootprintthroughintensifyingAldeployment.TheAlsupercycledeepenstheexistingfaultlines(Figure1) neweconomyactivity,reinforcingthestronglegoftheK.Atthesametime,Al-driven labordisplacementrisks-whilenotyetmaterial-areweighingonconsumerconfidence(see:TheMacro-Micro DisconnectofAl-Driven NewEconomy).ThesignificantAlbuildoutalsoriskscrowdingoutoldeconomyinvestment. Domesticfragmentation:TheAl supercycleis creatingdistinctwinnersandlosersacrosssectorsandgeographies,evenasoveralltrickle-downtotheoldindustries,cities,andevenindividualsarepullingahead,againstanotherwisesluggishbackdrop “Al-firstpolicy":Despitethepolicyrhetoricof"employment-first"andWebelieve,solongassocialstabilityholds,facilitatingtheAltransitionsitsatthetopofthepolicy hierarchy.With thegrowthtarget revised down,the urgencyforbroad-basedcyclicalstimulusappears lowtous-reinforcingaselective,tech-orientedpolicyposture. Wemaintainourgrowthforecastat4.7%YoYfor2026E.TheAlsupercycleanchorstheheadlinenumber,particularlythroughsupply-sidestrength.26Q2islikelytobealowpointin thequarterlytrajectory,partlyduetotheMiddleEastshockandlaggingfiscaldeployment.Onprices,theenergyshockhasdriventhefirstlegofPPlreflation;webelieveanti-involutionand Al inflationarepoisedtodrivethenext.Wereckonnominalgrowthcouldreachafive-yearhighof6.7%in2026E. Weexpecttargeted,piecemealsupporttodomesticdemandahead-notbroad-basedbigstimulus.Structuralefforts suchasthe“SixNetworksinitiativeareunderway,enablingAladoptionand stabilizinginvestment.Weseeagoodchancethatthe JulyPolitburomeeting(heldonthe30in2025)maysignal incrementalmeasuresto support consumptionand household income.That said,an outrightincrease inthebudgetdeficitorspecial governmentbondquota is notourbasecase.Whilemonetarypolicyisnotinthedriversseat,wekeepourcallforasymbolic10bpsratecutin26H2E.WeexpectthePBoCtomaintainitsmanagedsee USDCNYedging towards6.7. TheAleconomytakesoff TheAleconomyisshiftingfromintangiblealgorithmdevelopmenttotangibleinfrastructurebuildout.TheDeepSeekmomentsettledapivotalquestion-Chinamomentum,furthercementingthetrendasthemostsignificanttechnologicaltransition forChinain decades (Figure 2).The shift is visible across at leastthreedimensions: Token:China'sdailytokenusagehit140trn inMarch2026,upfrom0.1trnatthebeginningof2024(Figure3). Computingpower:China's intelligentcomputingtripledin2025vs.2024,accordingto MIITdata (Figure 4). semiconductormanufacturersandmaterialsproviders-mirroringthebroader(Figure 5). AlisnowfrontandcenterinChina'sK-shapedeconomy.Thepost-Covidrecoveryhasbeenbifurcatedwithsupplyoutpacingdemand(Figure6),externaldemandaheadofdomesticdemand(Figure7),andthenew economyleadingtheold.TheunfoldingAlsupercycleissettowidenthedivergenceandcreatefurtherfragmentation withintheweakleg,inourview. Source: MIIT,news reports, Citi Research Afurtherboosttothestrongleg growthseen sofar.Even ifexportmomentumweretosubside,webelieveChina'sownAl-transitiondemandcouldsustainproduction. Exports:fromcyclicalstrengthtostructuraltailwind China'sexportboomthisyearismorestructuralthancyclical.Threefeaturesstand out: Alhardware:Al-relatedexports-spanningupstreamchips,midstreampowerequipment,anddownstreampersonalelectronics-accountedfor20.3%ofChina'stotalexportsin2025(Figure8).Growthacceleratedto34.8%YoYinJan-May2026,contributing6.8pptstoheadlineexportgrowthof15.6%YoYoverthe sameperiod (Figure9).Withtheglobal Altransitionstill in itsearly stages,thisstrengthisunlikelytofaltersoon. Prices:PPlreflation,whichkickedinfromMarch,contributed~5pptstoexportgrowthof14.0%YoYinApril (la