What’s next for China’s economy in 2026 – and how it plans to tackle challenges

After a turbulent year marked by the trade war and domestic headwinds, China will head into 2026 cautiously as it grapples with structural challenges to growth.

Global investors are watching closely to see how Beijing works to shore up confidence, double down on strategic industries and mitigate overcapacity, all while navigating a fast-evolving geopolitical environment.

In this explainer, the Post distils forecasts from major investment banks and economists on what to expect in 2026, also the first year of the next five-year plan – a socio-economic blueprint that typically sets the tone for policy direction.

GDP outlook

There is consensus among major financial institutions that China’s economy will grow moderately in 2026, shaped by supportive policy measures and global pressures.

Goldman Sachs expects real gross domestic product to expand 4.8 per cent next year, slightly down from 5 per cent in 2025, while Morgan Stanley also projects 4.8 per cent growth. The Economist Intelligence Unit (EIU) forecasts 4.6 per cent growth, “as China gradually targets economic expansion of around 4 per cent over the next decade to meet its 2035 development goals”.

Other institutions hold a more conservative outlook. S&P Global Ratings raised its 2026 forecast to 4.4 per cent, citing lower US tariffs, subdued domestic demand and slower export growth. The IMF projects 4.2 per cent growth, pointing to external headwinds and structural challenges.

Fiscal and monetary policy

Policy easing in 2026 is expected to continue, as Beijing works to stabilise growth amid slowing investment and consumption.