China is likely to lower its 2026 economic growth target to a range of 4.5%–5.0% while keeping policy supportive, as policymakers shift greater focus toward longer-term structural priorities under the upcoming 15th Five-Year Plan, according to BofA Securities.
The targets are expected to be unveiled when the National People’s Congress (NPC) opens on March 5, alongside details on fiscal policy, monetary stance and a draft outline of the new five-year roadmap.
BofA economists said a slightly softer growth target would reflect ongoing domestic demand weakness and lingering structural headwinds, including property-sector stress, demographics and local government debt pressures. Seventeen of China’s 31 provinces have already trimmed their growth goals for 2026, signaling a more cautious tone at the local level.
Despite a lower headline target, policy support is expected to remain steady. Policymakers previously reaffirmed a “moderately loose” monetary stance and a “more proactive” fiscal posture. BofA continues to expect around 20 basis points of policy rate cuts this year, alongside targeted lending tools to support priority sectors.
On the fiscal side, the deficit is likely to remain near 4% of GDP, with increased issuance of special treasury bonds and local government special-purpose bonds to channel funds toward infrastructure and strategic projects.
Reviving domestic demand remains the central challenge. Fixed-asset investment contracted in 2025 for the first time in more than three decades, while consumption softened as earlier subsidy effects faded. Investors will be watching for signals on whether consumer subsidies are expanded and whether infrastructure spending accelerates.
The draft 15th Five-Year Plan is expected to draw significant attention, particularly for its focus on scaling artificial intelligence adoption, raising the consumption share of GDP, and managing local-government and property-sector debt risks.
According to BofA, the clarity and enforceability of these long-term targets will be key in shaping investor expectations for China’s next policy cycle.
Source: Investing