The US‑China trade deal has reduced tariff uncertainty for 2026, supporting expectations of resilient exports and continued policy support for domestic demand, especially consumption.

Inflation is expected to stay subdued, with the 2026 forecast trimmed to about 0.6% from 1.0% on weakness in food and fuel prices.

The PBoC is anticipated to inject liquidity to support government bond supply, with an expected 25 basis point RRR cut in Q1 and a 10 basis point policy rate cut in Q2 2026 (pushed from Q4 2025).

Standard Chartered raises its 2026 China GDP forecast to 4.6% on total factor productivity gains and solid exports amid the ongoing housing adjustment.

Policy challenges include balancing capacity cuts with investment stabilization and efficiently allocating fiscal resources to back government spending and the local‑government debt swap program.

The official budget deficit is projected to narrow slightly to about 3.8% of GDP in 2026, with sizeable central and local special bond issuance funding government spending and local-government debt swaps.

China’s 15th Five-Year Plan prioritizes consumption and innovation, signaling a shift toward new growth engines—consumption‑oriented and tech‑driven sectors—reducing the relative share of the property sector in coming years.

China’s macro policy stance is expected to stay supportive to cushion growth, while authorities avoid ultra‑loose measures to protect financial stability and align relief with long‑term structural goals.