How will China’s key growth drivers evolve in 2026-27?
Our baseline forecast expects China’s GDP growth to slow modestly to 4.5% in 2026. We expect exports to decelerate in 2026, leading to a much narrower growth contribution from net exports. Overall domestic activities are likely to stay largely resilient, with property downturn to continue albeit with smaller contractions, consumption to maintain a modest but softer pace, infrastructure and manufacturing investment to recover modestly from the sharp YoY decline in H2 2025. We expect CPI inflation to increase to 0.4% and PPI to narrow decline. In 2027, stabilizing property activities, normalizing export growth and steady consumer confidence may underpin a slightly better GDP growth (4.6%), higher inflation and stronger RMB exchange rate.
