Part 1: Examining History - Can Export Dividends Revive Domestic Demand?

The key to whether export-driven profits can stimulate domestic demand lies not in improved corporate earnings, but in whether those profits can be successfully converted into widespread job creation and wage growth. History offers both positive and negative examples.

For a failure case, look at Japan from 2002 to 2007. A global trade expansion, a weak yen, and a shift toward high-end manufacturing supported Japanese exports, leading to significant recovery in corporate profits and equipment investment. However, household income growth remained weak, and consumption stayed sluggish. The root cause was that companies prioritized using profits for balance sheet repair, technological upgrades, and overseas expansion over raising employee wages. Simultaneously, household balance sheets were under pressure, and a trend toward "non-regular" employment in the labor market intensified, weakening overall wage flexibility and causing a disconnect between corporate earnings and household income.

A successful example is South Korea from 1998 to 2000. Following the 1998 financial crisis, South Korea's export recovery quickly translated into wage growth, and consumption rebounded rapidly. The reason was that South Korea's overcapacity was concentrated in tradable sectors like semiconductors, electronics, and information and communication technology. The export recovery thereby spurred production quickly. Furthermore, the centralized restructuring of the financial and corporate sectors repaired the credit transmission mechanism. Combined with supportive fiscal and employment policies, the recovery in corporate orders and production was quickly converted into jobs and wage increases, creating a virtuous cycle of "external demand - production - employment - consumption."

Part 2: China's Economy Shows K-Shaped Divergence - Can the Overseas Demand Dividend Boost Domestic Recovery?

China is currently in a phase where the corporate recovery is confirmed, but the transmission to households remains to be seen. Since 2024, China's exports have been steadily recovering, and since 2026, industrial enterprise profits have accelerated further. However, the performance of the corporate and household sectors has not been fully synchronized. On one hand, high-tech products and upstream raw materials are the main sources of profit improvement, with industries having greater exposure to overseas business showing relatively better profitability. On the other hand, traditional manufacturing and consumption-related sectors remain under pressure, and household income and consumption expenditure have not yet moved up in step with corporate profits.

Nevertheless, China still possesses favorable conditions to improve this transmission mechanism. First, the comprehensive manufacturing system provides a foundation for the export dividend to spread to upstream and downstream industries and the producer services sector. Academic research shows that the impact of an external demand shock on corporate sales and intermediate input procurement is usually quick to appear, while employment, constrained by hiring costs, capacity adjustments, and order persistence, often increases only gradually over the following years. Second, when market-based transmission mechanisms are weak, macroeconomic policies are cushioning household income pressure through a combination of measures, including "stabilizing employment, strengthening social security, and promoting consumption." In the future, profit recovery in industries with higher participation from some central state-owned enterprises could also provide additional fiscal space through the transfer of state capital gains.

Whether the subsequent mechanism can be straightened out requires step-by-step observation and confirmation to support a beta rebound in consumption. The key links are: first, industry diffusion - whether the profits of high-performing industries can drive a recovery in upstream and downstream industrial chains and the producer services sector. Second, income transmission - whether corporate profit growth can be truly reflected in broader hiring demand and an improvement in residents' wage income. Third, consumption conversion - whether rising household income can lead to a rebound in the propensity to consume, especially in services and discretionary consumption.

Risk Warnings: A sharper-than-expected decline in global external demand; overseas trade restriction policies exceeding expectations; limited comparability of historical samples.