As December begins, the economic trajectory for 2025 has largely taken shape, showing a "high start, low finish" trend. China’s GDP grew 5.2% year-on-year in the first three quarters, with Q1 at 5.4%, Q2 at 5.2%, and Q3 at 4.8%. Data from October and November indicate continued downward pressure in Q4, but policies stabilizing investment and mitigating risks are expected to help achieve the full-year growth target of around 5%.

Meanwhile, multiple institutions have released their 2026 economic outlooks. As the first year of the 15th Five-Year Plan, 2026 is projected to maintain a growth target of approximately 5%, supported by stronger macro policies, early deployment of major projects, and efforts to stabilize the property market.

**Two "Above-Expectation" Trends in 2025** On November 30, China’s National Bureau of Statistics reported the manufacturing Purchasing Managers’ Index (PMI) at 49.2%, up 0.2 percentage points from October but still below the expansion threshold. The acceleration of a 500 billion yuan policy-driven financial tool and the revitalization of 500 billion yuan in unused local government bond quotas have injected incremental funding into investment while bolstering local fiscal capacity.

Liu Xiaoguang, Deputy Director of the National Academy of Development and Strategy at Renmin University, noted that while GDP grew 5.2% in the first three quarters, the pace slowed quarter by quarter. Due to high base effects and supply-demand imbalances, Q4 growth may dip to around 4.5%, with full-year growth likely between 4.9% and 5.0%.

Liu highlighted a "strong supply, weak demand" dynamic in 2025. Industrial output rose 6.2% YoY, while services grew 5.4%, demonstrating resilience in supply chains despite tariff pressures. However, subdued demand was evident in persistently low inflation, with CPI down 0.1%, PPI down 2.8%, and the GDP deflator falling 1.1%. Despite a 10-basis-point cut in the 1-year LPR, real interest rates remained elevated due to deflationary pressures, dampening consumption and investment.

Luo Zhiheng, Chief Economist at Yuekai Securities, pointed to two "above-expectation" trends—strong export resilience and a buoyant stock market—and two "below-expectation" trends—a deeper-than-expected property slump and sluggish consumption. Exports rose 5.3% in USD terms from January to October, while tech stocks led market gains. However, property sales and private investment remained weak.

Wang Qing, Chief Macro Analyst at Oriental Gold Rating, noted that November’s PMI rebound aligned with expectations, supported by stimulus measures and improved U.S.-China trade talks. Still, the index has lingered in contraction for eight straight months, and the non-manufacturing PMI fell below 50 for the first time this year. Further policy easing, including potential rate cuts and fiscal stimulus, is expected to stabilize growth into 2026.

**2026 Growth Forecast at ~5%** To counter 2025’s slowdown and ensure a strong 2026 start, more proactive policies are needed. The 15th Five-Year Plan will prioritize major projects in urban renewal, energy, infrastructure, and tech, alongside consumption-boosting measures in elderly care, tourism, and education.

Liu Xiaoguang identified three growth drivers for 2026: strategic projects under the new five-year plan, accommodative fiscal and monetary policies, and improved corporate balance sheets. He projected baseline growth of 4.8%, potentially reaching 5%, with a "low start, high finish" trajectory.

Policy recommendations include raising the fiscal deficit ratio to 5%, further monetary easing, and property market stabilization measures. Luo Zhiheng suggested embedding price targets into growth goals, maintaining a deficit ratio above 4%, and leveraging Fed rate cuts to ease domestic borrowing costs.

Li Xunlei, Chief Economist at Zhongtai International, cautioned that 2026 exports may weaken as U.S. tariff effects fade and global trade risks rise. He expects a 5% growth target, supported by a higher fiscal deficit (4.5%) and additional special bond issuances.

Huang Wentao, Chief Economist at China Securities, projected steady 2026 growth at ~5%, driven by export resilience, tech advancements, and policy support, laying groundwork for China’s 2035 development goals.