2026-01-23 03:56:00
China is expected to lower its 2026 growth target, signalling tolerance for slower expansion amid global and domestic headwinds.
Summary:
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China likely to set 2026 growth target at 4.5%–5%
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2025 growth met target but relied heavily on exports
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Global slowdown weighing on future prospects
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Policymakers shifting focus to “high-quality” growth
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Domestic demand and investment remain key challenges
China is expected to set a more conservative official economic growth target for 2026, signalling a growing acceptance in Beijing that external headwinds and domestic structural challenges are limiting the scope for rapid expansion. According to reporting by the South China Morning Post, policymakers are likely to aim for growth of between 4.5% and 5%, down from the 5% target achieved in 2025.
China’s $19 trillion economy met last year’s official growth goal despite weak domestic demand and renewed pressure from a second Trump administration. Growth was supported by a record trade surplus of around $1.2 trillion, as exporters redirected shipments to alternative markets to offset sluggish consumption at home. Economists caution, however, that this export-led buffer is becoming harder to sustain as global growth slows and trade competition intensifies.
The external backdrop is deteriorating. The International Monetary Fund expects global growth to remain subdued this year before slowing further in 2027. For China, that implies exporters may need to accept lower margins to maintain volumes, raising concerns about profitability, deflationary pressures and rising trade frictions.
As a result, Beijing faces mounting pressure to recalibrate its growth model. Policymakers are increasingly focused on shifting away from breakneck, investment-heavy expansion toward what they describe as “high-quality” development. That approach emphasises productivity gains, domestic consumption and more balanced growth, aimed at avoiding a prolonged period of stagnation similar to Japan’s post-bubble experience.
Some economists argue that headline growth figures may already be overstating underlying momentum. Estimates from private analysts suggest the economy may have expanded by closer to 2.5%–3% last year, implying a sizeable shortfall versus official data. The Rhodium Group has attributed much of the slowdown to a sharp decline in fixed-asset investment as domestic demand weakened in the second half of the year.
Against this backdrop, a 4.5%–5% growth target would represent a tacit acknowledgement of more constrained conditions ahead. Rather than signalling distress, such a move would indicate a willingness to tolerate moderate deceleration while prioritising economic resilience, reform and sustainability over headline speed.
