JPMorgan Chase's Chief China Economist and Head of Greater China Economic Research, Zhu Feng, recently shared his latest analysis on key market topics, including the 2026 Government Work Report, the outline of the 15th Five-Year Plan, and the economic impact of recent international geopolitical conflicts. Zhu believes that setting this year's GDP growth target within the range of 4.5% to 5% more accurately reflects the characteristics of the economy during its transitional phase and provides greater flexibility for policy adjustments. While external demand remains a crucial growth engine, expanding domestic demand has been listed as the primary task in the Government Work Report for two consecutive years, indicating a deepening understanding of domestic demand, particularly consumption. Regarding recent fluctuations in international oil prices triggered by US-Iran tensions, he views the direct impact on China as limited but cautions that rapid energy price increases could suppress global economic growth, potentially causing a "second-round impact" on China through reduced external demand.

Effective investment and exports are expected to underpin economic growth, while further breakthroughs in consumption policies are anticipated. The 2026 Government Work Report proposes "economic growth of 4.5% to 5%, striving for better results in practical work." Zhu interprets this target range, slightly lower than last year's, as well-aligned with China's current economic realities, offering more room and flexibility for policy. He notes that as China's economy undergoes transformation, slower growth often accompanies this process; this range represents an important assessment and appropriate adjustment for the transitional phase. Regarding growth engines for 2026, Zhu judges that the largest driver will likely still be external demand. While policies introduced this year have not significantly intensified overall, further measures could be deployed depending on economic developments. The consumption sector is temporarily unlikely to become the core driving force. Zhu observes that momentum in effective investment is already visible in recent data, becoming a key tool for stabilizing growth. He points to noticeable improvements in infrastructure investment, particularly in areas related to 15th Five-Year Plan projects and the effective investment emphasized in the current Government Work Report. Overall, he believes effective investment and exports can provide substantial support for China's economy this year, helping to underpin growth.

Zhu also highlighted that a significant feature of the 2026 Government Work Report is its emphasis on domestic demand, especially consumption, which has been the primary task for two years running. Amid an increasingly complex and severe external environment, exports may continue to act as a growth engine, but boosting consumption remains a vital long-term challenge. Continuing to prioritize stimulating domestic demand this year, along with related supporting policies, demonstrates the government's clear understanding of both international conditions and the domestic economic situation, affirming that expanding domestic demand, particularly consumption, remains a future policy focus. On fiscal policy, Zhu stated that expansionary fiscal deficits this year still lean towards investment, including projects for the start of the 15th Five-Year Plan period and the latest investment data, reflecting the policy's continued emphasis on the supply side and government guidance. He analyzes that government policies habitually focus on the supply side, which is relatively easier to implement from an execution standpoint and yields quicker short-term effects, whereas stimulating consumption still faces significant challenges. Specifically, special government bonds or special-purpose bonds for "dual priorities" and "dual new initiatives" have a relatively limited direct impact on continuously boosting consumption. Direct measures like the 250 billion yuan allocated for trade-in programs and 100 billion yuan in fiscal coordination funds can play a role in the short term, but the market still expects more substantial fiscal policies and supporting measures for the consumption sector going forward.

The status of domestic demand has been elevated, while risk prevention has been deprioritized. Zhu noted that compared to last year's Government Work Report, a key enhancement is the deepened recognition and emphasis on domestic demand, particularly consumption and effective investment. This year's report focuses on growth, transformation, domestic demand, and technology, aiming to fully leverage China's scale advantage as a major consumer market by building a unified national market. Breaking down domestic market barriers and reducing local protectionism are important steps against internal competition and also positively impact consumption stimulation. Another highlight is the emphasis on international trade balance. Zhu stated this reflects the government's full awareness of rapidly changing international conditions. Against a backdrop of pressure and uncertainty in foreign trade, expanding domestic demand and strengthening international trade balance can help alleviate external pressures from trade frictions, supporting sustained and stable medium-to-long-term economic growth. Furthermore, Zhu specifically mentioned the changed sequencing of risk prevention in the Government Work Report. Previously ranked sixth with stricter wording emphasizing the prevention of systemic risks, it has now moved to tenth place with a more moderate tone, focusing more on risk prevention in key areas and enhancing security capabilities. He believes this adjustment holds significant practical meaning—the previous stricter rhetoric and rigid requirements for risk prevention and resolution somewhat limited the scope for growth and consumption-stimulating policies. Now, with risk prevention relatively deprioritized, it creates more favorable conditions and flexibility for policies aimed at boosting consumption and effective investment. "Ultimately, addressing downward pressure still relies on economic growth; rapid growth helps resolve many risks and creates favorable conditions for governance and restructuring," Zhu concluded. From a global perspective, including in China, many crises in sectors like finance and real estate have been digested during periods of rapid growth. Growth can both accelerate pace and improve quality, with risk prevention serving as an important safeguard.

Since 2025, international investors have closely watched the effectiveness of "anti-involution" policies. Zhu indicated that these policies have begun to show results, with recent improvements visible in PPI and CPI data, particularly in certain sectors. Using the platform economy as an example, last year's timely and effective regulatory measures for sectors like platform economics show there is still room for further optimization in related areas. He pointed out significant differences between this round of "anti-involution" and the 2015 supply-side reforms. The 2015 reforms focused on the supply side, whereas the current "anti-involution" approach balances both demand and supply sides. The previous round targeted traditional mature industries like steel and coal, while this round also involves emerging sectors such as platform economics, electric vehicles, and photovoltaics, which are highly prioritized by the state and have promising development prospects. Zhu also noted that, in terms of causation, issues in many industries currently stem from weakness on the demand side.

The direct impact of oil price fluctuations on China is relatively limited. Recent escalation in US-Iran conflicts has driven a rapid rise in international oil prices. Regarding this, Zhu believes the recent impact of international geopolitics on China is mainly twofold: uncertainty in trade, and shocks to the supply of core commodities due to changing geopolitical situations. Zhu analyzes that the US Supreme Court's February ruling on IEEPA tariffs is favorable for Chinese exports and Sino-US trade negotiations, bringing US tariffs on Chinese goods to a more competitive level compared to other countries. Export data for January-February shows a significant increase in China's exports to the US. Concerning the impact of recent high oil prices, Zhu stated that due to China's energy structure being predominantly coal, new energy, and green nuclear power, coupled with diversified sources of oil and gas, the direct impact of oil prices on China is relatively limited. Historical data suggests that a $10 per barrel increase in oil price translates to approximately a 0.1 percentage point effect on China's consumer prices, a low figure attributed mainly to the stabilizing role of state-owned enterprises like the "big three" oil companies and relevant National Development and Reform Commission policies on oil prices and supply. However, he also noted that medium-to-long term, China's economy might face potential impacts from persistently high energy prices on two levels. First, impacts on consumer and producer prices could squeeze household consumption capacity and increase corporate costs, slowing economic growth. Second, the so-called "second-round impact"—where oil price increases transmit faster to major economies like the US and EU, raising prices and suppressing growth, thereby weakening external demand for Chinese exports.

Regarding oil price trends, Zhu stated, "JPMorgan Chase's current assessment is that if Brent crude prices remain around $100 per barrel by mid-year and gradually decline to $80 per barrel in the third and fourth quarters, we estimate global inflation would rise by 0.8 percentage points this year. This would suppress global consumption and production, reducing global GDP growth by 0.6 percentage points." Zhu also mentioned that the global economy currently remains resilient, and a recession is not anticipated this year, especially given the strong first-quarter performance in economies like the US (particularly in high-tech industries). Even if GDP slows in subsequent quarters, full-year growth remains promising. In terms of policy responses, he noted that most global central banks are currently in a wait-and-see mode. The Federal Reserve might tighten monetary policy or delay the widely anticipated June interest rate cut if it observes accelerating inflation, which would influence its economic trajectory, but room for policy adjustment still exists. For China, Zhu expressed confidence in its policy response capability, pointing out that although monetary policy space is relatively limited, fiscal policy still has the capacity for breakthroughs and can be deployed more effectively to counter external shocks.