High capacity utilization rates could spark investment rebound
Surging exports could give manufacturing fixed asset investment (FAI) an unexpected boost this year.
ICYDK: Manufacturing FAI grew a paltry 0.6% in 2025, amid overcapacity concerns and Beijing’s anti-involution drive.
- Meanwhile, manufacturing capacity utilization fell to 74.6% last year – 2.2 percentage points lower than 2019 levels.
But, but, but: We’ve identified four industries where surging exports are incentivizing manufacturers to scale up capacity investment.
First, chemical fiber manufacturing, which produces inputs for textiles and industrial fabrics.
- The industry has a capacity utilization rate of 85.5% – three percentage points higher than pre-pandemic levels – following an explosion in export orders.
- For example, exports of lyocell – a synthetic material used in textiles – grew 47% last year, with China now accounting for 60% of global production (CCFA).
Chemical fiber manufacturers are ramping up production capacity.
- Jingtong – a key player in China’s carbon fiber industrial chain – recently announced it is investing almost half a billion RMB in new manufacturing facilities (STCN).
- Shanghai Petrochemical, meanwhile, is expanding its carbon fiber manufacturing facilities to service global demand for wind turbines (Sinopec Group).
Second, electronic equipment manufacturing, driven by a surge in semiconductor demand (News.cn):
- On December 30, CXMT – China’s leading DRAM manufacturer – revealed plans to raise a whopping RMB 29.5 billion to expand manufacturing.
- Three module and chip makers – Tianshan Electronics, Changdian, and Tongfu Microelectronics – all recently announced plans to expand capacity.
And finally, power generation and general equipment.
- Export orders for transformers and power generation equipment have surged, driven by the US data center buildout and European power grid upgrades, with China’s major transformer factories now running at over 90% utilization (Jingji).
The bottom line: Strong foreign demand, combined with policy support and state-directed investment, means the outlook for FAI in 2026 may not be as bleak as we first thought.
