China has officially lowered its 2026 GDP growth target to a range of 4.5–5.0%, marking a shift from the previous three years' target of 'around 5%' and signaling a tolerance for slightly slower economic expansion while maintaining long-term ambitions [1]. ING’s Chief Economist for Greater China, Lynn Song, notes that this adjustment provides policymakers with greater flexibility to pursue quality growth, which has been a priority in recent years [1]. Despite the softer target, the government’s longer-term goal of doubling per capita GDP by 2035 compared to 2020 remains unchanged, as outlined in the government work report [1].
ING forecasts GDP growth of 4.6% year-on-year for China, which falls within the new official range [1]. Fiscal and employment targets remain broadly stable, and the stable fiscal deficit and bond issuance targets indicate a degree of restraint, with policymakers avoiding excessive reliance on extra stimulus to drive growth [1]. This approach may disappoint some market participants who had anticipated a stronger fiscal stimulus push [1].
The policy mix suggests that China will continue its recent trends, focusing on moving up the supply chain and improving technological self-reliance [1]. However, a key challenge remains in boosting domestic demand, as domestic confidence is described as tepid and continues to restrain economic momentum [1].
CONCLUSION
China’s decision to lower its GDP growth target to 4.5–5.0% reflects a shift toward prioritizing quality growth and policy flexibility, while maintaining ambitious long-term goals. ING expects growth to remain within this new range, but the restrained fiscal stance may temper market expectations for aggressive stimulus. The outlook hinges on China’s ability to strengthen domestic demand amid cautious consumer sentiment.