High-frequency data and leading indicators for July indicate that consumer spending, infrastructure, and advanced manufacturing sectors are showing positive signs, suggesting the economy is maintaining a steady pace of operation. However, pressure to sustain growth remains, signaling that macroeconomic policies need to be more effective in expanding domestic demand.

The release of July's national economic data is imminent, serving as a crucial window for assessing the economic trajectory for the third quarter and the second half of the year. Market attention is focused on the July performance. The National Information Center reports that offline consumer payment amounts rose 2.2% year-on-year in July, with a notable 8.5% increase in payments for home appliances and audio-visual equipment, both marking improvements from June. The "Shouqianba" index, which measures the vitality of small and micro businesses, climbed to 81.9 in July, up 3.1% from the previous month. Xing Yuguan, an associate researcher from the National Information Center, noted that the most encouraging change in July was the broadening of the recovery, with steady offline consumption growth and a concurrent uptick in bulk goods spending, further energized by summer tourism and cultural activities.

Infrastructure investment is showing signs of marginal improvement. High-frequency data reveals a continued rise in the asphalt operating rate and a positive year-on-year growth in the cement shipment rate in July, suggesting improvements in transport and other infrastructure investments. The investment structure is also improving, with advanced manufacturing investment surging 73.1% year-on-year, a substantial increase from June's 42.5 percentage points lower reading. The total value of successful bids for projects related to new infrastructure, such as computing power, data, and networks, grew by 0.8% year-on-year. Strategic emerging industry patent authorizations increased by 10.7% in July, with artificial intelligence-related patents jumping 60.0% year-on-year, accelerating from June. Xing Yuguan commented that the optimization of the investment structure, with market capital actively flowing into new quality productive forces, demonstrates confidence in industrial upgrading. The dense emergence of AI achievements provides dynamic momentum for the transition between old and new growth drivers.

Despite the complex environment, China's economy shows resilience, but leading indicators suggest some near-term pressure, making it imperative to effectively expand domestic demand. On the production side, the manufacturing Purchasing Managers' Index (PMI) fell to 49.2% in July, down 1.1 percentage points from the previous month, returning below the boom-bust line of 50. Zhang Liqun, a researcher at the Development Research Center of the State Council, stated that the decline indicates a slight increase in downward pressure. Wen Tao, an analyst at the China Logistics Information Center, noted that extreme weather conditions in some regions in July disrupted production and logistics, slowing production activities slightly. However, the production index remains near the 50% threshold, indicating strong resilience in the manufacturing sector's production side, with a stable foundation for long-term operation. On the demand side, both domestic and foreign demand are slowing. The new orders index fell to 48.5% in July, down 2.7 percentage points, reflecting a general slowdown in manufacturing market demand. Seasonal factors have impacted port logistics, causing some volatility in manufacturing exports, with the new export orders index falling to 49.6% in July. Zhang Liqun emphasized the need to pay close attention to and reverse the weakening trend in domestic demand, suggesting increased government investment in public products and strengthened fiscal and monetary support to quickly expand physical work volumes, thereby driving business and social investment, boosting employment and income, and promoting a comprehensive recovery in domestic demand. Wen Tao believes that as the impact of extreme weather fades, production and supply chains in affected areas will normalize, stabilizing market demand. The implementation of policies like the "six networks" and "two new" initiatives will stimulate effective investment and leverage social capital, continuing to empower manufacturing transformation and upgrading. Overall, domestic demand in the manufacturing sector is expected to stabilize and rise in August.

Recent policy signals suggest that macroeconomic control is likely to be intensified to support stable growth. Monetary policy is expected to take the lead. The July 30 meeting of the Politburo of the Communist Party of China emphasized the comprehensive use and timely adjustment of monetary policy tools, optimizing fiscal and monetary coordination to promote domestic demand. The People's Bank of China's second-quarter monetary policy report stated a plan to promptly formulate and implement practical incremental policies, increase counter-cyclical adjustments, and expand domestic demand and optimize supply. Zhang Di, chief macro analyst at China Galaxy Securities, noted that the third quarter is a key window for observing monetary policy adjustments, with room for moderate easing, including potential cuts in reserve requirement ratios and interest rates. The third quarter will also see a peak in government bond issuance, with monetary policy expected to cooperate with fiscal policy, and the 8000 billion yuan new policy-based financial tool expected to accelerate implementation. Fiscal policy will be more proactive, with faster spending and bond fund utilization. Zhao Zeyong, deputy director of the Debt Management Department of the Ministry of Finance, recently stated that the ministry will better coordinate funding and project construction, accelerate disbursement, and quickly form physical work volumes. Incremental measures are also expected. Finance Minister Lan Fo'an, in a signed article in the People's Daily, proposed promoting coordination between fiscal and monetary policies to actively introduce policies that benefit stable growth and expectations. On the industrial policy front, policies to promote the development of new quality productive forces are expected. Wang Weiming, Chief Engineer of the Ministry of Industry and Information Technology, stated that future industries require scientific pacing and proactive planning. The ministry will accelerate the formulation of development policies for key tracks, clarify goals and directions, and dynamically adjust based on industrial development. Currently, specific policies have been introduced for several tracks, with a batch of new policies being intensively drafted.