Key Highlights
- China plans to adopt more proactive macro policies in 2026, as Xi Jinping signals continued state support for economic growth.
- Beijing expects to meet its 2025 growth target of around 5%, despite weak consumption and a prolonged property slump.
- New fiscal measures and investment plans aim to boost household demand and stabilize long-term economic momentum.
China will roll out more proactive economic policies in 2026 to support long-term growth, Xi Jinping said on Wednesday, as Beijing remains confident the world’s second-largest economy will meet its around 5% growth target this year, according to state media.
China Signals More Proactive Macro Policies for 2026
Speaking at a New Year’s tea party attended by senior Chinese Communist Party officials, Xi said China’s economy is expected to expand to roughly 140 trillion yuan ($20 trillion) in 2025, highlighting what he described as the country’s resilience despite mounting domestic and external pressures, as reported by state broadcaster CCTV.
“Our country’s economy is expected to move forward under pressure, while showing strong resilience and vitality,” Xi said in his address, according to CCTV, reinforcing official optimism even as economic momentum softened toward the end of the year.
Confidence Despite Headwinds
Xi’s remarks come at a time when China’s economy continues to face persistent challenges, including soft household consumption, lingering deflationary pressures, and a prolonged downturn in the property sector, which has weighed heavily on confidence and investment, as noted in a recent Reuters report.
While Beijing has repeatedly emphasized its commitment to achieving “around 5%” growth in 2025, economists have flagged risks tied to sluggish domestic demand and structural imbalances. Nevertheless, Xi said the government would pursue what he called “effective qualitative improvement and reasonable quantitative growth,” while maintaining social stability. A language that signals continuity with Beijing’s broader economic strategy.
The message aligns with the recent macro policies statements suggesting that China will rely on targeted fiscal support and selective investment spending, rather than large-scale stimulus, to stabilize growth.
Focus on Consumption and Household Demand
A key pillar of China’s growth strategy remains boosting household consumption, an area that has underperformed as wage growth slows and consumers remain cautious. Xi’s comments reinforced earlier government pledges to raise incomes and support spending to offset weakness in traditional growth drivers such as real estate.
According to official disclosures, the central government has allocated 62.5 billion yuan from special treasury bond proceeds to local governments to fund a consumer goods trade-in programme next year. The scheme aims to encourage households to replace older appliances and vehicles, thereby stimulating demand across the manufacturing and retail sectors.
Policy advisers say such measures reflect Beijing’s growing recognition that reviving domestic demand is critical to sustaining growth as exports face uncertainty amid global economic and geopolitical tensions.
Investment Push Continues Into 2026
Alongside consumption support, Beijing is also doubling down on public investment. China’s state planner has released early investment plans for 2026, including two major construction projects backed by about 295 billion yuan in central budget funding, according to state media.
The projects are part of a broader effort to shore up infrastructure investment, particularly in areas linked to industrial upgrading, logistics, and regional development. Analysts say front-loading investment approvals allows local governments to maintain momentum even as fiscal space becomes more constrained.
This dual approach, pairing consumption support with infrastructure spending, suggests Beijing is seeking to balance short-term stabilization with longer-term structural goals, including technological self-reliance and productivity gains.
Policy Outlook and Market Implications
Xi’s comments signal that China is unlikely to pivot away from its current policy framework, even as growth pressures persist. Instead, the emphasis appears to be on continuity of macro policies, incremental easing, and targeted fiscal measures, rather than sweeping reforms or aggressive stimulus.
For global investors, the reassurance that China expects to meet its growth target may help stabilize sentiment, particularly in emerging markets and commodities. However, questions remain over whether incremental measures will be sufficient to reverse deflationary trends and restore consumer confidence.
As China enters 2026, markets will be watching closely for further details on fiscal expansion, support for local governments, and potential steps to address the property sector, an area Beijing has so far approached cautiously.
