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China has fixed its growth target for the year 2026 at a range of 4.5% to 5%, termed by news outlets as the “cautious” growth target since 1991. The figure has been revealed in the 4th Session of the 14th CPPCC National Committee held in Beijing, where Premier Li Qiang has outlined the key economic priorities for the year in the government work report. The measured growth target for the Chinese economy is a clear sign that the country is taking a measured approach in its transition to the 15th Five-Year Plan period (2026–2030).
Monetary Policy and Other Key Economic Indicators
In its monetary policy, Premier Li Qiang has indicated that China is likely to sustain a “moderately accommodative” monetary policy in 2026 to support growth in the Chinese economy. In addition to the growth in the Gross Domestic Product, there are other key indicators that are likely to support growth in the Chinese economy in the coming year, including the creation of over 12 million jobs in cities, keeping the surveyed urban unemployment rate around 5.5%, and keeping the growth rate in the consumer price index near 2%. The growth in residents’ income is likely to follow the performance of the overall economy, while the balance of payments is likely to remain stable.
In the production side, China has indicated its intention to sustain grain output at around 1.4 trillion jin, or around 700 million tons, in the coming year, while its carbon dioxide emissions per unit of Gross Domestic Product are likely to decrease by around 3.8%.
Fiscal Expansion to Support the Growth Plans
The government has planned to support the economic growth plans with an expansionary fiscal policy. The amount allocated for the annual deficit in terms of the country’s GDP is fixed at 4%, which is approximately RMB 5.89 trillion or $854 billion. This is RMB 230 billion or $33.4 billion higher than the amount spent in the previous year.
The combined effect of loose monetary policies and fiscal policies implies the Chinese government’s plans to rely on its policies to achieve its 4.5 to 5 percent target for 2026. However, the Chinese government has set its target lower than in recent years, implying a lower room for rapid upside potential for the Chinese economy.
Rationale Tied to Five-Year Plan Kickoff
In explaining the rationale behind the allocation, Li Qiang pointed out that the figure is a result of the fact that the year 2026 is the starting point for the 15th Five-Year Plan period. The amount is chosen in a way that allows space for reforms, risks, and a better foundation for performance in the coming years. The premier stated that the aim was aligned with the long-term objectives of the country until the year 2035. He stated that the aim was also aligned with the underlying potential of the Chinese economy. He stated that the conditions for the fulfillment of the aim were favorable. He also stated that the regions should apply the guideline issued at the national level. He also stated that the regions should work diligently towards the fulfillment of the aim.
The government, therefore, through the above statements, is signaling that it wants the Chinese economy to have a strategic pause at the beginning of the new five-year plan. The statements on the need for the Chinese economy to guard against risks and the need for reforms also suggest that the government is not anticipating huge performance from the Chinese economy in the year 2026. The local governments will have the freedom to pursue the aim that is aligned with the objectives of the Chinese government.
Source: Inside Asian Gaming (IAG)
