Beijing: China is expected to aim for a 5% economic growth target in 2026, signaling the government’s efforts to counter persistent deflation and stimulate domestic demand. Economic advisers suggest that maintaining growth at this level will help stabilize the economy, which has been struggling with weak consumer spending, excess industrial capacity, and a lingering property sector slump.
The government is likely to adopt a combination of fiscal and monetary measures to support this growth. Analysts anticipate that the fiscal deficit will remain relatively high, potentially above 4% of GDP, allowing for expanded public spending on infrastructure, social welfare, and consumption incentives. In parallel, the People’s Bank of China may resume interest rate cuts early next year to encourage borrowing and investment.
China is also seeking to rebalance its economy by emphasizing household consumption and social welfare as key drivers of growth. Government advisors reportedly aim to raise the contribution of consumption to GDP from roughly 40% to 45%, reflecting a strategic shift from China’s traditional investment- and export-driven growth model. This structural realignment is expected to help sustain longer-term economic stability and reduce reliance on volatile global markets.
However, significant challenges remain. The property sector continues to experience low demand and high inventory, while manufacturing overcapacity and subdued global orders weigh on industrial output. Consumer confidence remains fragile, further complicating efforts to boost spending and reduce deflationary pressures. Economists warn that broad-based recovery may be gradual, with deflation potentially persisting into 2026 before price stability returns.
The 5% growth target reflects a pragmatic approach by Beijing, balancing ambition with realism amid structural headwinds. Policymakers are signaling a priority on economic stability, structural reform, and sustainable growth rather than rapid expansion at any cost. For the global economy, a stable Chinese recovery could provide much-needed support, given the country’s role as a major engine of global trade and investment.
Observers will be watching closely for early 2026 policy moves, including potential interest rate adjustments, new fiscal stimulus measures, and the details of China’s upcoming 15th Five-Year Plan, which is expected to highlight consumption, welfare expansion, and industrial restructuring. These steps will be crucial in determining whether China can successfully end its deflationary cycle and maintain steady economic growth in the years ahead.