China is shifting its attention to new growth areas in an effort to boost its economy. Previous growth drivers, such as property and infrastructure, reached a peak over the past few years, resulting in a large amount of debt. To combat decline, the country must strategize around emerging focus points, which include electric vehicles, artificial intelligence (AI), clean energy and high-tech manufacturing.

Read our synopsis of Moody's Ratings' recently concluded campaign on what's next for China, and bookmark our blog to stay abreast of developments in the global credit markets.

China's balancing act

The rise of electric vehicles globally has enabled China's manufacturing sector to benefit from increasing demand. Its new energy vehicle (NEV) industry is poised to become an important contributor to China's GDP. The rapid growth of artificial intelligence has also positioned certain sectors, such as technology and internet services companies, to reap quick gains.

However, more traditional industries will be slower to adopt the use of AI. According to our colleagues at Moody's Ratings, other avenues of growth lie beyond the domestic economy, hence a push for overseas expansion. While the annual growth rate of overseas revenue has accelerated for rated Chinese industrial companies, increasing geopolitical tension will be a constant hurdle to overcome, due to heightened scrutiny and higher tariffs from other countries.

Further obstacles include a downturn in the property sector and an aging population. Weakened buyer demand and investor sentiment has contracted the real estate market, with a high-profile example from earlier this year being the liquidation of China Evergrande Group, a real estate developer giant. Meanwhile, a declining birth rate will have long-term effects on China's working population. Aging demographics limit various areas of economic growth while also leading to higher healthcare and social spending, which may result in increased interest rates and lower investment spending.

Want to take a deeper dive? Access related content from Moody's Ratings*:

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• China's growing electric vehicle sector will boost economy, but at a cost to automakers*
• Chinese firms speed up their overseas expansion but geopolitical tensions are a key hurdle
• Tech and services sectors poised for early benefits from China’s AI push but risks remain

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