Editor's note: Matteo Giovannini, a special commentator on current affairs for CGTN, is a finance professional at the Industrial and Commercial Bank of China, a Non-Resident Associate Fellow at Center for China and Globalization (CCG) and a member of the Global Young Leaders Dialogue. The article reflects the author's views and not necessarily those of CGTN.

The release of China's second-quarter economic data has provided a significant boost to global market confidence. Recently, more than 10 major foreign financial institutions have successively raised their expectations for China's growth outlook. In its mid-year outlook report, Morgan Stanley lifted its forecast for China's economic growth in 2025 by 0.3 percentage points and increased its projections for the following two years by 0.2 percentage points each.

Similarly, institutions such as Goldman Sachs, United Overseas Bank, and Nomura have revised their growth expectations upward by 0.3 to 0.6 percentage points. This broad-based adjustment reflects renewed optimism about China's economic trajectory, underpinned by the strength of key growth sectors and the impact of targeted policy measures aimed at expanding domestic demand and reinforcing financial stability.

At the heart of China's growth story are several industries not only rebounding from recent pressures but also entering a phase of structural acceleration. Advanced manufacturing has become a core driver, with sustained investment transforming China from a low-cost producer into a high-value industrial powerhouse. Strategic emerging sectors, such as semiconductors, new energy vehicles and high-end equipment manufacturing, are leading this transition.

Data from the first half of 2025 shows double-digit growth in New Energy Vehicle (NEV) production and sales, consolidating China's global leadership in green mobility. Similarly, the semiconductor and electronics industries are benefiting from state-backed initiatives to enhance self-reliance in key technologies, alongside rising global demand for AI-related hardware.

The green economy is another growth powerhouse. China remains the world's largest investor in renewable energy, with newly installed solar and wind capacity up by 54.2 percent and 22.7 percent year-on-year in the first half of 2025. This expansion is part of China's commitment to peak carbon emissions by 2030 and achieve carbon neutrality by 2060. The green transition is also driving growth in construction and infrastructure, from retrofitting urban spaces for energy efficiency to upgrading grid networks for clean energy integration.

Equally significant is the digital economy, which continues to transform how China produces, consumes and innovates. Backed by the government's "Digital China" agenda, heavy investments in 5G networks, cloud computing and industrial internet applications are fueling growth in e-commerce, fintech and AI-driven services. Retail sales grew 4.8 percent year-on-year in the first half of 2025, reflecting the strong integration of online and offline consumption. This digital shift is also revitalizing traditional sectors like logistics, healthcare and education, creating new engines for sustainable growth.

These rapidly expanding sectors are inseparable from the supportive role of government policy. In the wake of a complex global environment, China's policymakers have adopted a mix of pro-growth measures designed to stabilize expectations, expand domestic demand, and strengthen the financial system.

A key pillar of this policy framework is stimulating household consumption. In recent quarters, Beijing has introduced tax incentives for the purchase of durable goods, subsidies for energy-efficient products and expanded support for housing upgrades. These initiatives have boosted consumer confidence and created a multiplier effect on industrial output, particularly in manufacturing sectors linked to domestic demand.

On the investment side, fiscal policy has remained expansionary. The issuance of ultra-long-term special-purpose government bonds has financed large-scale projects in transportation, clean energy and public services. Crucially, these investments are aligned with long-term development priorities, ensuring that stimulus measures contribute to sustainable growth rather than short-term surges.

China's financial market has also benefited from regulatory fine-tuning aimed at improving liquidity and investor sentiment. The People's Bank of China has implemented targeted interest rate cuts and lowered the reserve requirement ratio for banks to support lending to small and medium-sized enterprises and strategic industries. Capital market reforms, such as simplifying listing procedures and encouraging institutional investment, have deepened equity and bond markets, attracting foreign capital and boosting overall market activity.

Collectively, these policies have boosted domestic demand, enhanced the flow of capital to productive sectors, and strengthened investor confidence. These efforts are especially important in an era marked by global uncertainties, from trade tensions to geopolitical risks.

Looking ahead, the convergence of policy support and structural sectoral growth offers compelling reasons for optimism. China's economic transition is increasingly defined by innovation-driven industries, environmentally sustainable development and a digitally integrated economy. These are sectors with strong resilience and global competitiveness, capable of propelling the economy forward even as traditional growth drivers, such as real estate, undergo necessary adjustments.

The recent upward revisions to China's growth outlook by leading foreign financial institutions reflect more than short-term optimism, as they represent recognition of a broader transformation underway. With advanced manufacturing, green industries and the digital economy at the forefront and underpinned by a proactive policy mix, China is laying the foundation for sustained, high-quality growth.

For global investors and businesses, this evolving landscape presents opportunities to engage with a market that is not only recovering but also reshaping itself for the future. For policymakers, it reinforces the importance of balancing short-term stabilization with long-term reform in a balancing act that, if successfully managed, will keep China at the center of the global growth narrative for years to come.

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