China begins implementing its five-year economic and social development plan in 2026 with efforts to halt the slowdown shown in recent data. Beijing has the task of managing the external fury resulting from its export machine, without shaking its commercial achievements in the global market.
The country aims to maintain its main pillars supporting growth: the broken real estate sector and the technological boom. Gaining independence in critical areas and scratching US supremacy are at the heart of the objectives. Promoting the activity includes promises to promote domestic consumption and, for this, even traditional methods are valid: taxing condoms with the aim of increasing the fertility rate.
“In 2026, a new five-year plan begins. And the plan is ambitious, as usual”, says Luciano Sobral, chief economist at Neo Investimentos. “In practice, there should not be many changes in the development focused on exporting industries, of increasing sophistication and complexity”, points out Sobral, a former economist at Santander.
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“China must increasingly be able to compete in sectors that today are still dominated by developed countries and present innovations on the border between academia and industry. It is a version of the development strategy adopted by successful development cases in East Asia, with a much greater scope and scale.”
Investor confidence in the strategy to leverage innovation is evident in assets linked to cutting-edge technology. In stock market debuts, shares of Chinese chip startup MetaX jumped almost 700% in mid-December. The initial public offering (IPO) raised 4.20 billion yuan, equivalent to US$596.4 million.
The IPO was also exuberant for Moore Threads, which designs graphics processing units for AI training, prompting the company to warn its own investors to hold back their enthusiasm. What the new Nvidia will be is an answer thrown into the future amid the debate about whether the party is turning into a bubble.
In implementing the plan, fiscal spending should recover at the beginning of next year, with an increase in the issuance of central government bonds, says Capital Economics.
“This should help avoid deepening the recent slowdown, but growth in 2026 as a whole is likely to be at least a little weaker than in 2025,” observe analysts at the consultancy. AI-related investment will likely see a strong increase next year, but exports are expected to contribute less to growth, says Capital.
The chief economist for China and director of Asian Economics at Bank of America, Helen Qiao, raised the Chinese GDP growth forecast to above consensus, and now expects growth of 4.7% in 2026 and 4.5% in 2027. “With positive signs emerging from recent trade negotiations and the implementation of stimuli, the risks to our forecast are tilted upwards”, he points out.
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“The general expectation points to a gradual but controlled slowdown in GDP growth, with projections from financial agencies and international institutions ranging between 4.0% and 4.6% for 2026, below the informal target of 5% that the Chinese government will likely seek to combat deflation,” says Igor Barenboim, chief economist at Reach Capital, who predicts an expansion closer to 4%.
The real estate market is a critical point for economic activity. And signs from the Central Economic Work Conference meeting suggest that additional political support will be modest. On this topic, the outcome for the problematic developer China Vanke should become evidence of the extent to which government entities are willing to support the real estate sector.
SZMC, a wholly owned subsidiary of the State Assets Supervision and Administration Commission of Shenzhen Municipality, holds a 27.18% stake, making it the largest shareholder of developer China Vanke, according to Fitch. SZMC has already injected around CNY29 billion (US$4.2 billion) into China Vanke from January to November 2025, supporting debt repayment in the capital market. Even so, the company continued to struggle.
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“This is not China’s dreaded ‘Lehman moment.’ But the psychological impact of Chinese property developer Vanke’s inability to pay its debts on time cannot be underestimated,” says Yardeni Research. “Vanke’s problems suggest that the real estate sector’s difficulties are far from over, making the government’s GDP growth targets even further away”, assessed the consultancy. The company carries $50 billion in debt, Yardeni says.
If the choked engine of the real estate sector generates uncertainty, China tries old measures to maintain growth even over long-term horizons. From January 1, a value-added tax (VAT) will be charged on medicines and contraceptive products for the first time in more than three decades. The intention to encourage families to have more children, after decades of being limited to one child, aims to recalibrate the demographic pendulum, after the number of deaths exceeded the number of births in China.
