China is expected to maintain its current annual economic growth target of about 5% next year, according to government consultants and analysts, a target that will require authorities to keep the fiscal and monetary taps open as they try to end the period of contraction.
The goal will be part of Beijing’s efforts to start a new five-year plan on a solid footing and shake off the effects of a prolonged slump in the real estate market, weak consumer demand, factory spare capacity, and declining infrastructure investment.
While senior leaders have signaled a shift towards supporting household consumption and restructuring the economy over the next five years, these measures may take a long time to produce results, putting the immediate focus on fiscal and monetary support.
Most government advisers who spoke to Reuters said they favored a 2026 growth target of around 5%, the same level as this year, with a minority proposing a slightly lower target of 4.5% to 5%. Leaders are expected to endorse the target at the annual Central Economic Work Conference this month, where priorities for next year will be set.
The growth target will not be announced publicly until Parliament’s annual meeting in March.
The consultants are not involved in decision-making, spoke on the condition of anonymity due to the closed nature of the discussions, and their proposals generally reflect the consensus among economists in the private sector. Last year, the agenda-setting meeting was held from December 11 to 12.
“We should set a target of about 5% for 2026, which is the first year of the 15th Five-Year Plan,” an aide said. “There will certainly be challenges to achieving this goal, but there is room for maneuver in fiscal and monetary policies.”
Most advisors call for the annual budget deficit rate to remain at 4% or slightly higher. China has set a record budget deficit target of about 4% of gross domestic product this year to support the growth goal.
Citi analysts expect the central bank, which last cut interest rates in May, to resume monetary easing as early as January 2026, with the period following the annual Central Economic Work Conference also seen as a window for a new round of support for the real estate sector.
“In terms of fiscal policy, government bond issuance could be brought forward again to 2026, with a gradual shift towards consumer support and social welfare spending,” they said in a note.
China needs an average annual growth of 4.17% over the next decade to double its per capita GDP to $20,000 from the 2020 level, a milestone that would mark its transformation into a “moderately developed country,” according to an official study outlining the five-year plan’s proposals.