(Jan 29): Over a dozen Chinese provinces have reduced their economic growth targets for 2026, pointing to a likely downgrade of the national goal for the first time in four years.
Most of the 20 regions that have so far made their plans public are setting out lower targets for expansion in gross domestic product (GDP) from last year, based on local government work reports. The vast majority, including economic powerhouses Guangdong and Zhejiang, brought their goals down by 0.5 percentage point or shifted to a range with a lower end.
Targets set across China’s 31 mainland regions usually correlate with goals eventually adopted at the central level, with changes by the biggest provincial economies usually read as a strong signal of a nationwide adjustment to come.
The decisions announced around the country this month may validate expectations that Chinese policymakers will also set the national GDP growth target a notch lower this year, after maintaining it at “around 5%” for three straight years. The official goal will likely be 4.5% to 5% when it’s revealed during the annual legislative sessions in early March, the South China Morning Post has reported, citing unnamed sources.
Such a change would signal authorities are adopting a more pragmatic approach towards managing the economy in the face of challenges including sluggish consumer spending. Their tolerance of slightly slower growth would also give policymakers more flexibility in the use of stimulus.
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“An explicit downgrade of the growth target would lower the demand for stimulus, particularly as exports and the new economy continued to support headline growth in the K-shaped recovery,” Citigroup Inc economists led by Xiangrong Yu wrote in a note on Wednesday.
As a result, the risk is rising that monetary easing — including cuts to interest rates and banks’ required reserves — could get delayed beyond the first quarter, they said.
A Bloomberg survey conducted in January found economists were forecasting a 10-basis-point reduction in the People’s Bank of China’s policy rate as well as a quarter-percentage cut in the reserve requirement ratio by the end of March.
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“We expect policymakers to be pragmatic in the face of stronger structural headwinds, from long-term population decline, shifting growth drivers and de-globalisation. Given the slowing momentum in a range of recent data — and signs that more stimulus is coming but only in light doses — it will be tough for growth to stay above 5% this year. We see it coming in at about 4.5%.”
China’s economic momentum weakened further last quarter even as it met the government’s target in 2025. Consumer spending and business investment remained sluggish.
Meanwhile, net exports contributed a third of economic growth in 2025, the highest level since 1997, official data showed.
The reductions of targets by local governments indicate “policymakers may be looking for more flexibility this year as domestic demand pressures persist, particularly stemming from the investment side,” HSBC Holdings Plc economists including Erin Xin said in a report. “Recent developments suggest Beijing may take a more conservative approach for the target this year.”
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