Morgan Stanley Report: China's manufacturing sector is set to enter a decade-long $12 trillion capital expenditure supercycle, defined as "Industry 5.0."

Morgan Stanley, in its latest BluePaper report, states that China's manufacturing sector is upgrading from the "world's factory" to a "global industrial operating system." This transformation is expected to trigger a decade-long super cycle of industrial capital expenditure, amounting to $12 trillion, which the firm defines as "Industry 5.0." The bank projects that China's cumulative industrial investment could reach approximately 340 trillion yuan between 2026 and 2035, with the "Industry 5.0" pathway contributing an additional 80 trillion yuan in capital expenditure. Funding will primarily target smart factory upgrades, embodied AI, industrial software, advanced semiconductors, critical materials, and the development of overseas industrial ecosystems. The report anticipates that by 2035, the profit margin of Chinese industrial enterprises could rise from approximately 5% in 2025 to about 8%, potentially increasing GDP by around 3.5% and boosting China's share of global manufacturing value added from approximately 28% to 30%.