China estimates 2026 GDP growth to drop to the slowest pace since early 1990s, a government report showed Thursday, Xinhua reported. The government, however, indicated that it would strive to beat the target.
The economy grew at a 5% clip in 2025, which marked the highest among the global economies, but was below-trend relative to the 8% growth seen between 2000 and 2025. The fourth-quarter growth was softer at 4.5%.
Trimmed GrowthTarget: The government had targeted around 5% gross domestic production (GDP) over the past three years, Xinhua said. The toned down forecast was part of a key policy document delivered by Premier Li Quang, at the opening session of the National People’s Congress and the annual legislative gathering, held in Beijing.
Among the other targets fixed by the Chinese communist regime is
- about 5.5% surveyed unemployment rate
- More than 12 million new urban jobs
- 2% consumer price inflation
- Personal income growth that align with economic growth
- Budget deficit at around 4% of GDP
- Equilibrium in balance of payments
- About 700 million tons of grain output
- A 3.8% drop in carbon dioxide emissions per unit of GDP
Source: ING
While tabling the report, Li acknowledged several headwinds buffeting the economy such as dramatically changing international and economic environment and deep-rooted structural problems that weighed down on consumption and investment growth.
Economist Reacts: The slight softening of growth target suggests stability appears to be considered important, said ING’s Chief Greater China economist Lynn Song.That said, he views the maintenance of fiscal targets as signaling the reluctance to lean heavily on fresh stimulus to reinvigorate growth.
“Combined with China's anti-involution drive, there will be a focus on reducing wasteful and duplicative investment while improving synergies and building on China's long-term strategic direction,” Song said.
According to the economists, the focus would be on improving industrial modernisation, improving technological self-reliance, and ramping up domestic demand. He noted that the report reflected the government’s intention to double per-capita GDP by 2035 relative to 2020.
Song noted that the focus this year would be boosting domestic demand. Policymakers continued to prioritise creating new growth drivers through innovation and securing technological self-reliance, he said, adding that key tech sectors such as the artificial intelligence (AI), semiconductors, and cloud computing will likely continue to benefit from outsized investment.
What this means for the Futures Market: The toned down growth target underscores a cautious demand outlook for industrial commodity futures such as copper and aluminum. This in turn could weigh down on futures prices. However, technology-linked sectors could find support from Beijing’s emphasis on innovation, semiconductors, and AI.
At last check, crude oil futures firmed up to more than $76, reacting to the ongoing geopolitical tensions involving the U.S. and Iran. Most precious also gained ground Thursday morning, while copper and aluminum futures retreated.
Photo Caption: South Korea’s KOSPI Rebounds after Oil Shock from Middle East Tensions Sparks Violent Unwinding of AI-Fueled Stock Rally
