Can China’s growth model persist in 2026?

2025 in China: the first half saw a growth recovery, a tentative end to the property collapse, and an equity market boom; the second half marked a notable downward shift. At the annual Central Economic Work Conference (CEWC), Beijing concluded that “this year was very much not an ordinary year.” 2026 is expected to be a continuation, albeit slightly more “normal,” but China’s sources of economic growth remain fundamentally unbalanced.
Key trends:
Real Estate: the sector continues to crater, with limited support.
Consumption: weak demand persists.
Investment: shrinking capital formation (“disappearing investment”).
Exports: a historic export boom, though with a high base.
Forecast and policy:
2026 real GDP growth: 4.3% (range 4.1–4.6%), moderating from 2025 due to the high base for export growth.
Fiscal stance: expansionary; budgetary deficit around 4% of GDP.
Support tools: policy banks and local government bond quotas.
PBoC: a fine-tuning approach to balance growth and inflation while preserving banking sector profitability; no meaningful policy rate cuts expected; focus on liquidity operations and reserve requirement ratio (RRR) adjustments