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China Daily | English | News | Nov. 21, 2025 | UndeterminedEconomic Growth

Domestic and international financial institutions express confidence in China's economic outlook, expecting a steady recovery supported by policy measures and industrial upgrading. This follows the recent release of recommendations for China's 15th Five-Year Plan (2026-30), which sets the development framework for the next five years. China's economy is projected to maintain robust growth amid fluctuations, with fiscal policies becoming more proactive in 2026, including a deficit-to-GDP ratio around 4 percent and an expanded quota for special-purpose local government bonds to boost infrastructure projects.

Monetary policy is expected to remain accommodative, with potential cuts to reserve requirement ratios and interest rates, alongside continued use of structural monetary tools and government bond transactions by the People's Bank of China. Forecasts place GDP growth at around 5 percent for 2025 and approximately 4.9 percent in 2026. Despite significant growth potential over the medium to long term, soft domestic demand and the need for price stabilization remain challenges for policymakers.

The government aims to drive "resilient, steady and inclusive" growth, emphasizing technological self-reliance through investments in key sectors such as semiconductors and artificial intelligence (AI). These sectors are viewed as critical for high-quality development and supply chain resilience. State resources and market forces, including the stock market, will be leveraged to support their expansion.

Globally, AI investment is expected to grow but faces sustainability concerns. Currently, most AI investments are self-financed by profits with minimal borrowing. However, as investment scales increase, reliance on debt markets may rise, potentially crowding out credit and increasing credit spreads. Notably, major firms like Meta and Alphabet have already started restricting borrowing this year.