SINGAPORE, March 5 (Reuters) – China set its 2026 economic growth target at 4.5%-5% on Thursday, slightly lower than the 5% pace achieved last year, signalling room for greater, albeit not decisive, measures to address industrial overcapacity and rebalance the economy.
Analysts have said a lower growth target gives Beijing more flexibility to implement reforms that make the world’s second-largest economy less reliant on exports for growth, having posted a record $1.2 trillion trade surplus in 2025.
China also released its 15th five-year plan, and as widely expected, pledged investments in innovation, high-tech industries, scientific research and a “notable” – but unspecified – increase in household consumption as a share of economic output.
COMMENTARY: LIU CHENJIE, CHIEF ECONOMIST, UPRIGHT ASSET MANAGEMENT, SHENZHEN: “The policy signal is loud and clear: guided by a pragmatic growth target of 4.5% to 5%, China will focus on technology advancement while adopting a more proactive fiscal policy and a strategy of expanding domestic demand.
“The downward tweak of economic growth target is aimed at creating space for high-quality growth in areas such as technology and high-end manufacturing. We expect adjustment in interest rates and RRR in the second quarter. There will be more structural stimulus toward technology development.” SAMUEL SIEW, HEAD OF INVESTMENT, SYNERGY FINANCIAL ADVISERS, SINGAPORE:
“It is broadly in line with market expectations, given that recent GDP and consumer spending figures have shown signs of weakness.
By lowering the growth target to the 4.5%-5.0% range, it aligns more closely with the Q3-Q4 2025 GDP data we have been observing. China has also traditionally been conservative in setting its economic forecasts, so this should not come as a surprise. The target likely factors in the U.S. tariffs as well, which are expected to remain a headwind to growth.” YUAN YUWEI, FUND MANAGER, TRINITY SYNERGY INVESTMENTS, HONG KONG:
“The policies are generally mild, without aggressive moves. It shows the government seeks to keep the economy stable, and curb volatility in either direction. The report obviously has not taken into account the Iran conflict.
“If Iran surrenders, that’s very negative to China, which counts the Strait of Hormuz as a crucial trade rout. Today’s China market rise is inspired by overnight rebound in U.S. stocks.
“China’s ‘National Team’ investors may also be tasked with steadying the market around the NPC meeting. Whether the oil price hike is fleeting or lasting depends on whether the Iran conflict will end soon or develop into a war of attrition.” HO WOEI CHEN, ECONOMIST, UOB, SINGAPORE:
“It indicates that they are comfortable with slowing headline growth. The focus is to stabilise the economy, not to significantly lift growth. These are very pragmatic targets that we are seeing from China.
“The focus for the government is very clear. High-tech growth, private consumption need to be raised into the medium term. But consumption has been lagging and weighed down by the property sector, so it won’t be so easy to lift this in the short term. Whereas exports and the manufacturing sector – I think those will be the key growth engines this year.” SHIER LEE LIM, LEAD FX AND MACRO STRATEGIST – APAC, CONVERA, SINGAPORE:
“China’s decision to set its 2026 GDP growth target at 4.5%–5% reflects a pragmatic approach amid a challenging global and domestic environment. This marks the lowest target in decades and signals a recognition that headwinds from slower external demand, geopolitical uncertainty, and persistent domestic deflationary pressures will likely weigh on growth momentum.
“China’s continued commitment to higher fiscal deficit and targeted support for technology sectors shows a willingness to balance structural reforms with near-term support measures.
“The authorities’ focus on boosting domestic demand and consumer sentiment is crucial, especially as weak household confidence remains a drag on recovery.” DING SHUANG, CHIEF ECONOMIST, GREATER CHINA AND NORTH ASIA, STANDARD CHARTERED BANK, HONG KONG:
“With the external tensions easing somewhat, China somewhat lowered growth target, has refrained from a more expansionary fiscal policy. The focus is on strengthening technological innovation and expanding domestic demand.
“The report also proposes improving measures to adapt to AI development and promote employment and entrepreneurship, which is a relatively new approach.” TIANCHEN XU, SENIOR CHINA ECONOMIST, EIU, BEIJING:
“The growth target is quite realistic. It’s a shift from a ‘number-first’ mindset towards a ‘quality-first’ one. Beijing does not necessarily see high growth rates as a good thing, because it may incentivise local officials to exaggerate growth with white elephant projects and data manipulation. The fiscal policies – less strong stimulus – align with the more conservative growth target.
“It’s about delivering the more tangible economic results such as household income growth and expanded access to public services. Also the lower target will create space for structural changes like ‘anti-involution’.” TING LU, CHIEF CHINA ECONOMIST, NOMURA, HONG KONG
“Special government bond issuance came in below my expectations. I had forecast 1.7 trillion for ultra‑long special sovereign bonds, above the 1.3 trillion just released, and 4.8 trillion for special local government bonds versus 4.4 trillion.
“While overall special government bond issuance is unchanged from last year, Beijing lifted funding for the ‘new policy bank financing tool’ to 800 billion yuan from 500 billion.” YUAN TAO, ANALYST, ORIENT FUTURES:
“The growth target is lower than expected, which shows the government prioritizes quality over speed. Giving a range instead of a target figure means China is willing to tolerate slower growth, and will accelerate economic transformation, which is not a bad thing in the long run.
“The target has nothing to do with the Iran crisis.
“China’s market sentiment today is lifted mainly by improving risk appetite in global markets overnight.” SAKTIANDI SUPAAT, REGIONAL HEAD, FX RESEARCH AND STRATEGY, GLOBAL MARKETS, MAYBANK, SINGAPORE:
“The aim is to underpredict but then surprise on the upside… with the geopolitics, I think the expectation now in the world is we need China’s growth to pick up… with the Middle East situation, I think if it gets protracted, it’ll definitely affect demand and prices, so the question is whether there will be stagflation globally. What we don’t need is China to weaken.”
ANDY JI, ASIAN FX & RATES ANALYST, ITC MARKETS, SHANGHAI:
“The key takeaway is that Beijing has acknowledged the structural slowdown by shifting from a fixed “around 5%” target to a flexible and lower range (4.5%–5%). Beijing is trying to manage a ‘controlled glide’ in growth while building a new economy based on technology rather than property.
“The sheer volume of specialized debt is intended to show that the government will maintain relatively large fiscal spending in 2026. Beijing is trying to force a shift from investment-led to consumption-led growth. The government is using Ultra-Long Special Bonds to fund “Trade-In” programmes. This isn’t just about helping people buy new TVs; it’s about forcing the industry to upgrade to more energy-efficient, high-tech machinery.” MARCO SUN, CHIEF FINANCIAL MARKET ANALYST, MUFG (CHINA), SHANGHAI:
“It appears policymakers intend to maintain a broadly supportive policy stance, consistent with the approach taken since 2025. Our onshore desk’s quantitative models suggest growth momentum could stabilize and potentially bottom out in 2026. Taken together, these signals imply monetary policy is likely to remain accommodative, with an emphasis on supporting “new economy” sectors, particularly AI and related industries, through lower financing costs and targeted credit support, rather than broad-based stimulus.” MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISER, ALLIANZ:
“Facing internal and external headwinds, China has dialled back its 2026 growth target to 4.5–5.0%. While this marks the lowest since 1991, it may still prove ambitious unless Beijing aggressively ramps up domestic economic reforms.” LI HAO, RESEARCH DIRECTOR, CYPRESS FUND, BEIJING:
“China set a more proactive fiscal stance than last year, targeting a 4% deficit ratio, alongside moderately loose monetary policy and a continued focus on boosting domestic demand.
“Policymakers unveiled a new tool to spur consumption: a 100-billion-yuan ‘fiscal‑financial coordination’ fund dedicated to lifting demand, signalling more targeted support. Funding for science and technology will increase, with R&D expenditure planned to grow over 7% annually, outpacing the GDP growth target.”
(Reporting by Reuters Asia bureaus; Compiled and edited by Sherry Jacob-Phillips)
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