Next Week in China: 27-31 July 2026

Major Data Releases:

• 27 July: China to report June industrial profits for enterprises above the designated size
• 27 July: China to report medium-term lending facility (MLF) interest rate and scale of operations
• 27 July: Hong Kong to report June external merchandise trade statistics
• 30 July: China to report Q2 2026 business revenue of enterprises above the designated size engaged in culture and related industries
• 31 July: China to report July manufacturing Purchasing Managers’ Index (PMI)
• 31 July: Hong Kong to report Q2 2026 advance estimates on gross domestic product (GDP)
• 31 July: Taiwan to report Q2 2026 GDP advance estimates

As July ends, next week’s data releases on the Chinese economy will focus on the MLF, which is the benchmark rate for bank loans, and the official PMI figure. Data regarding liquidity management and evidence of underlying demand are also areas to watch.

For MLF, around RMB 300 billion (USD 44.3 billion) in loans are maturing in July. The liquidity backdrop should be more manageable as July is not traditionally a strong month for new lending and as signs of credit demand remain soft. The six-month bill rediscount rate for national and joint-stock banks once fell to an extremely low level of 0.61 per cent, suggesting limited demand for bill financing. Public expenditures released at end-June should also provide support to early-quarter liquidity, helping funding conditions improve after the quarter-end squeeze and allowing bank borrowing rates to move lower.

The biggest near-term disruption will come from the payment of value-added tax and corporate income taxes this month. Tax-related outflows may tighten money supply around mid-month, but historical patterns suggest that liquidity pressure is usually short-lived and tends to reverse quickly after the tax window. Against this backdrop, the MLF interest rate will be closely watched. The central bank has increased MLF rollovers for two consecutive months and has continued to follow a “drain short, inject long” approach. We therefore expect the July MLF operation to be larger than the maturing amount, and this will shape market expectations for funding conditions in August.

For PMI, we expect the July reading to remain below the 50.0 boom-bust line. The Emerging Industries PMI, a leading indicator for the official PMI, fell 2.6 points month-on-month to 47.8 in July. While this points to a continued contraction, the decline was smaller than the historical seasonal average drop of 3.7 points. Production and demand indicators softened but export orders rose by 1.7 points month-on-month, sales prices stopped falling, and the decline in purchase prices narrowed to 0.5 points. These data suggest three incremental signals: the industrial off-season effect remains clear; new energy, high-end equipment manufacturing and new materials continue to outperform seasonal trends; and next-generation information technology has seen a further pullback. Overall, seasonal factors should keep the July PMI in contraction but sector-specific data still point to structural resilience in high-tech manufacturing.

Chinese equities recovered sharply over the past week, partly due to state intervention in daily trades. As of Thursday, 23 July, the MSCI China Index was up 2.5 per cent while the Shanghai Composite climbed 2.99 per cent. The Shenzhen Component and ChiNext indices also gained 3.04 per cent and 4.28 per cent, respectively. Large caps continued to outperform small- and mid-cap peers, while growth stocks slightly outpaced value shares.

Since early July, A-shares have experienced sharp volatility as crowded positioning in technology has been digested. At the same time, capital has begun to rotate towards lower-positioned sectors such as financials, innovative drugs, new energy, non-ferrous metals, and chemicals, where earnings improvement and valuation repair previously received less attention. This movement has partly offset pressure from technology weakness and suggests the market is shifting from a single dominant theme towards more diversified pricing. In the short term, the pace of high-position digestion and sentiment recovery remains important. Over the medium term, A-shares should retain resilience, supported by broader sector rotation and still-selective structural opportunities.

This piece has been co-produced with Yiyi Capital Limited in Hong Kong, a China specialist and a part of a global financial services group.