The stabilizing role of the secondary industry, particularly high-end manufacturing, remains crucial. As 2026 approaches—marking the start of China's 15th Five-Year Plan—the China Macroeconomic Forum (CMF) recently released its "China Macroeconomic Analysis and Forecast Report." The report indicates that China's economy in 2025 has strived for breakthroughs, largely achieving its development targets. Over the next five years, China's economy is expected to maintain medium-to-high growth, though challenges such as declining exports, slowing investment, and potential spillover risks from the real estate sector persist.

Despite these challenges, the report highlights three new opportunities for stable economic growth: the launch of the 15th Five-Year Plan with proactive infrastructure investments, more active fiscal policies and accommodative monetary policies, and renewed vitality among micro-market entities as the macroeconomy recovers. These factors are expected to support steady economic progress in 2026.

Regarding industrial performance, the report notes that industrial production has remained robust this year. Corporate profitability has improved amid fluctuations, with reduced losses, though insufficient capacity utilization continues to constrain investment expansion. Efforts to clear overdue payments to enterprises have yielded results, and inventory overstocking has eased to some extent. "Notably, the contribution rate of the secondary industry has shown signs of stabilization and recovery in recent years," the report states.

**Industrial Production Persists Under Pressure** Despite complex international conditions and rising domestic competition, proactive macroeconomic policies have bolstered industrial production, sustaining overall growth. In October, industrial value-added output rose 4.9% year-on-year, with a month-on-month increase of 0.17%. From January to October, industrial output grew 6.1% year-on-year.

Capacity utilization, a key indicator of market supply-demand dynamics, improved slightly in Q3 2025 to 74.6%, up 0.6 percentage points from Q2 but still 0.5 points lower than the previous year. Sector-wise, notable recoveries were seen in automotive manufacturing and electrical machinery (including photovoltaic equipment and battery production), with increases of 2 and 1.4 percentage points, respectively.

**Corporate Performance Gradually Improves** The report attributes the gradual improvement in corporate performance to anti-overcapacity measures. The proportion of loss-making enterprises has narrowed. From January to October, industrial profits grew 1.9%, maintaining positive growth for three consecutive months. However, October saw a 5.5% decline due to a higher base effect and rising financial costs.

Zhang Liqun, a researcher at the Development Research Center of the State Council, emphasized the resilience of China's industrial sector amid global uncertainties.

**Progress in Clearing Overdue Payments** While corporate receivables growth has slowed, indicating improved cash flow, sustained efforts are needed. By late October, industrial receivables stood at 27.69 trillion yuan, up 5.1% year-on-year, with inventory rising 3.7%. The average receivables collection period extended to 69.8 days, up 3.4 days.

The revised "Regulations on Ensuring Payments to Small and Medium Enterprises," effective June 2025, mandates a 60-day payment deadline and prohibits coercive non-cash settlements. However, challenges like lengthy payment cycles and regulatory inconsistencies persist, requiring further policy refinement.

**Secondary Industry's Resurgence** As China transitions to high-quality growth, the tertiary sector dominates GDP contributions (over 50% since 2015), while the secondary sector's role had declined. However, the report notes a recent stabilization and rebound in the secondary industry's contribution rate, reaching 38.6% in 2024, driven by manufacturing upgrades and high-tech investments.

The report projects that during the 15th Five-Year Plan period, the tertiary sector will solidify its dominance, but the secondary industry—especially high-end manufacturing—will remain a critical stabilizer. It calls for policies fostering innovation-driven structural shifts toward higher-value industries.