SINGAPORE, March 5 (Reuters) – China has set its 2026 economic growth target at 4.5%-5%, slightly lower than the 5% pace achieved last year, signalling room for greater, albeit not decisive, measures to address industrial overcapacity and rebalance the economy.
Analysts have said a lower growth target gives Beijing more flexibility to implement reforms that make the world’s second-largest economy less reliant on exports for growth, having posted a record $1.2 trillion trade surplus in 2025.
COMMENTARY:
YUE SU, PRINCIPAL ECONOMIST FOR CHINA, EIU, SHANGHAI:
“The growth target is quite realistic. It’s a further shift from a ‘number-first’ mindset towards a ‘quality-first’ one. Beijing does not necessarily see high growth rates as a good thing, because it may incentivise local officials to exaggerate growth with white elephant projects and data manipulation.
“The fiscal policies – less strong stimulus – align with the more conservative growth target.”
ANDY JI, ASIAN FX & RATES ANALYST, ITC MARKETS, SHANGHAI:
“The key takeaway is that Beijing has acknowledged the structural slowdown by shifting from a fixed “around 5%” target to a flexible and lower range (4.5%–5%). Beijing is trying to manage a ‘controlled glide’ in growth while building a new economy based on technology rather than property.
“The sheer volume of specialized debt is intended to show that the government will maintain relatively large fiscal spending in 2026. The 4.4T Yuan Special Local Bonds matches the record high of 2025, while 1.3T Yuan Ultra-Long Sovereign Bonds also remain at the 2025 level. Beijing is trying to force a shift from investment-led to consumption-led growth. The government is using Ultra-Long Special Bonds to fund “Trade-In” programmes. This isn’t just about helping people buy new TVs; it’s about forcing the industry to upgrade to more energy-efficient, high-tech machinery.”
MARCO SUN, CHIEF FINANCIAL MARKET ANALYST, MUFG (CHINA), SHANGHAI:
“It appears policymakers intend to maintain a broadly supportive policy stance consistent with the approach taken since 2025. Our onshore desk’s quantitative models suggest growth momentum could stabilize and potentially bottom out in 2026. Taken together, these signals imply monetary policy is likely to remain accommodative, with an emphasis on supporting “new economy” sectors, particularly AI and related industries, through lower financing costs and targeted credit support, rather than broad-based stimulus.”
MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISER, ALLIANZ:
“Facing internal and external headwinds, China has dialled back its 2026 growth target to 4.5–5.0%. While this marks the lowest since 1991, it may still prove ambitious unless Beijing aggressively ramps up domestic economic reforms.”
LI HAO, RESEARCH DIRECTOR, CYPRESS FUND, BEIJING:
“China set a more proactive fiscal stance than last year, targeting a 4% deficit ratio, alongside moderately loose monetary policy and a continued focus on boosting domestic demand.
“Policymakers unveiled a new tool to spur consumption: a 100 billion yuan ‘fiscal‑financial coordination’ fund dedicated to lifting demand, signalling more targeted support. Funding for science and technology will also increase, with nationwide R&D expenditure planned to grow more than 7% annually, outpacing the GDP growth target.
“The GDP target’s lower bound is set at 4.5%, under the market’s roughly 5% consensus, underscoring an emphasis on higher‑quality growth.”
(Reporting by Reuters Asia bureaus; Compiled and edited by Sherry Jacob-Phillips)
