A series of economic stabilization measures introduced at the end of last year are gradually being implemented, supporting a positive start to the economy in 2026. In February 2026, the Yicai Chief Economist Confidence Index, released by the Yicai Research Institute, stood at 50.2, slightly lower than the previous month but remaining above the 50-point expansion-contraction threshold for the seventh consecutive month. Economists indicated that the measures rolled out late last year are underpinning a favorable economic commencement for 2026.
With the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC) sessions scheduled for early March in Beijing, economists believe that, considering the long-term goal of doubling the total economic output or per capita income by 2035, and based on the weighted average GDP growth targets from local "two sessions" at the start of the year, combined with China's actual economic growth over the past three years and the orientation of future macro policies, the GDP growth target for 2026 is likely to be set at around 5%. Concurrently, they expect the budget deficit-to-GDP ratio target to be approximately 4%, and the Consumer Price Index (CPI) growth target around 2%.
In this survey, chief economists forecast that, influenced by seasonal factors, new yuan loans in January will surge significantly to 4.97 trillion yuan from 910 billion yuan the previous month. Their average forecast for new total social financing (TSF) is 7 trillion yuan, and for the year-on-year growth of M2 money supply, it is 8.4%. They consider it unlikely that the Loan Prime Rate (LPR) or the reserve requirement ratio (RRR) for major financial institutions will change in February, but suggest the central bank may still opt to cut RRR or interest rates at an opportune time within the year.
On January 30, the central parity rate of the renminbi against the US dollar was 6.9678. Economists anticipate this rate will remain stable in February, with their average forecast for the end of February being 6.9. Their average year-end forecast for the USD/CNY exchange rate is 6.8.
**Confidence Index: February Average Forecast at 50.2** The Yicai Chief Economist Confidence Index for February 2026 was 50.2. Guan Tao of BOC International noted that China's economic development still faces numerous longstanding issues and new challenges, including deepening impacts from changes in the external environment, persistent prominent domestic contradictions of "strong supply and weak demand," and multiple risk隐患 in key sectors. Consolidating the foundation for sustained economic recovery and improvement, and taking more solid steps in high-quality development, requires continuing to implement proactive and effective macro policies on one hand, and comprehensively deepening reforms in a timely manner on the other, seeking momentum and vitality from reforms to steer the economy more towards endogenous growth.
Cai Wei of KPMG stated that policies to expand domestic demand are being actively deployed at the beginning of the year, with a clear intent for policies to take effect early. On one hand, incremental policies to expand domestic demand from late last year, including a 500-billion-yuan政策性 financial instrument and a 500-billion-yuan stockpile of local government special bonds, will be carried over and advanced in early 2026. On the other hand, since the start of the year,密集 policies related to real estate and fiscal finance have been introduced, and the first batch of budget quotas for "Two News" and "Two Heavy" projects in 2026 have been allocated in advance, which will support investment and consumption activities at the start of the year. Additionally, industries like photovoltaics and batteries may face adjustments to export VAT rebate policies in the second and third quarters of this year. To avoid related policy costs, enterprises in these sectors might concentrate on advancing exports in the first quarter, boosting economic growth momentum early in the year. With continuous policy support, growth momentum in subsequent months of the first quarter is expected to accelerate its recovery. Short-term attention should focus on the actual拉动 effect of fiscal policy intensity, monetary policy transmission, and consumption stimulus policies on the early-year economy.
Lian Ping of the Guangkai Chief Industry Research Institute indicated that the composition of economic growth momentum in 2026 will be more balanced than in 2025, characterized by "one increase, one rise, and one stability": First, consumption will increase. The contribution rate of final consumption expenditure is expected to rise to 55% in 2026, pulling GDP growth by approximately 2.75 percentage points for the year. The contribution rate and pulling effect are projected to increase by 3 percentage points and 0.15 percentage points, respectively, compared to 2025, continuing to be a major driver of economic growth. Second, investment will rise. The contribution of capital formation to GDP for the year is forecast at 25%, pulling GDP growth by about 1.25 percentage points. Third, exports will remain stable. The contribution of net exports of goods and services to GDP is estimated at 20%, pulling GDP growth by around 1 percentage point.
Wang Han of Industrial Securities anticipates that the Chinese economy will achieve medium-speed growth of 4.5% to 5% in 2026, balancing stabilization and structural adjustment. As the inaugural year of the 15th Five-Year Plan, the certainty of growth and new动能 will strengthen simultaneously, but internal and external challenges persist. The contribution of consumption will increase, investment will focus on new infrastructure and manufacturing upgrades, exports will maintain resilience, and real estate risks will be orderly mitigated.
Cheng Shi of ICBC International stated that in 2026, China's economy is expected to continue exhibiting characteristics of "stabilization with repair and structural divergence." On one hand, support for growth from new动能 will持续增强, with improved景气度 in high-end manufacturing, green transformation, and service consumption-related sectors providing a more resilient growth base. On the other hand, the recovery of domestic demand remains gradual, requiring time for improvements in household and corporate expectations, while adjustments in the real estate market still pose certain constraints. Against this backdrop, although the economy faces internal and external challenges, risks are generally controllable. With policy support, the economy is more likely to operate along a track of温和回升. Marginal improvements in prices and nominal growth will be important variables to observe.
**Average Forecast for Full-Year GDP Growth Target: 5%** Economists have made predictions regarding the full-year GDP growth target to be announced during the NPC and CPPCC sessions. They believe the 2026 GDP growth target may be set around 5%, with the budget deficit ratio target expected around 4% and the CPI growth target likely around 2%.
Cai Wei of KPMG noted that the Central Economic Work Conference emphasized implementing more proactive and effective macro policies. The Ministry of Finance has signaled clearly that overall fiscal expenditure intensity in 2026 will "only increase, not decrease." Given that expectations among residents, enterprises, and local governments remain relatively weak, and financing capacity is somewhat limited, the central government will still bear the primary responsibility for expansion in 2026, maintaining necessary fiscal deficits, overall debt规模, and expenditure总量 to ensure the strength of proactive fiscal policy in supporting domestic demand expansion and investment stabilization. The fiscal deficit ratio was arranged at around 4% for 2025. Considering policy continuity and counter-cyclical adjustment needs, he expects the deficit ratio to remain around 4% in 2026, while the broad fiscal deficit ratio, encompassing local government special bonds and ultra-long-term special treasury bonds, may edge up slightly to 8.9%, providing funding support for major projects, industrial upgrades, and livelihood保障.
Meanwhile, although the year-on-year CPI remained low at around 0% in 2025, the core CPI温和回升 to 0.7%, and the month-on-month figure stayed above 1% for four consecutive months. It is anticipated that with improvements in domestic demand and policies against "involution," prices will continue their温和回升 trend in 2026. A target around 2% aligns with the monetary policy consideration of "promoting a reasonable recovery in prices," helping stabilize market expectations and restore consumer confidence.
Zhou Xue of Mizuho Securities expects the 2026 deficit ratio target to remain unchanged from the previous year's level, but there might be an increase in the issuance quota for special treasury bonds.
Lian Ping of the Guangkai Chief Industry Research Institute believes that with持续加码 in macro policies, investment and consumption will recover steadily; ongoing efforts to curb "involutionary" competition will continue; meanwhile, slight increases in crude oil and pork prices will reduce their drag on inflation. Furthermore, the Ministry of Finance mentioned in a press conference that overall fiscal expenditure intensity in 2026 will "only increase, not decrease," with fiscal deficits, total debt规模, and expenditure总量 maintained at necessary levels. Expanding domestic demand is the primary task for current economic growth, necessitating持续 increases in fiscal expenditure规模.
Cheng Shi of ICBC International opines that against the backdrop of stabilizing growth, fiscal policy needs to maintain its proactive orientation, offsetting insufficient domestic demand through public investment and expenditures in key areas. Simultaneously, with strengthening fiscal discipline and debt constraints, policy will emphasize enhancing efficiency rather than单纯扩张规模. Maintaining the deficit ratio around 4% reflects strong support for economic repair while leaving room for fiscal sustainability. Additionally, recent trends show positive changes in price operations since the end of 2025, with year-on-year CPI recovering, improvements in service prices and some durable consumer goods prices, indicating a slow repair on the demand side. In this context, setting the 2026 CPI target at 2% helps policies continue to focus on expanding domestic demand, pushing prices towards a more sustainable recovery within a温和 range.
Wang Han of Industrial Securities predicts the 2026 deficit ratio target will be set between 3.8% and 4%, primarily for two reasons: firstly, the Central Economic Work Conference明确 stated the continuation of more proactive fiscal policy, maintaining necessary fiscal deficits, total debt规模, and expenditure总量. Secondly, a deficit ratio above 4% can demonstrate counter-cyclical adjustment strength while reserving room to address future risks.
**Prices: Average Forecast for January CPI at 0.4% YoY, PPI at -1.4%** Economists expect the year-on-year growth rate of the Consumer Price Index (CPI) in January to be lower than the figure published by the National Bureau of Statistics (NBS) for the previous month (0.8%), with an average forecast of 0.4%. Among them, Guan Tao of BOC International provided the highest forecast of 0.9%, while Wen Bin of China Minsheng Bank and Xie Yaxuan of China Merchants Securities gave the lowest forecast of 0.2%.
The economists' average forecast for the year-on-year Producer Price Index (PPI) in January is -1.4%, higher than the NBS's published figure for the previous month (-1.9%). The highest forecast for January PPI year-on-year growth is -1.2%, provided by Cai Wei of KPMG, Guan Tao of BOC International, and Xie Yaxuan of China Merchants Securities. The lowest forecasts are -1.7%, from Cheng Shi of ICBC International and Lian Ping of the Guangkai Chief Industry Research Institute.
Wu Ge of Changjiang Securities commented on prices, noting that historically, intensified geopolitical tensions, especially during phases where countries strengthen national defense, tend to support broad commodity prices through global industrial production. Recently, significant divergence among categories is evident, with gold and non-ferrous metals facing adjustments after reaching historical highs, while black系列 commodities remain constrained by traditional demand. Overall, considering structural price increases and low base effects, he expects the PPI, CPI, and even the overall GDP deflator to see some recovery at the beginning of the year.
Wen Bin of China Minsheng Bank stated that based on high-frequency data, food prices have generally risen, and energy prices have increased. He believes the increase in core CPI narrowed in January. Supporting factors include the显现 of the New Year's Day holiday effect, with business activity indices for scenic area services, retail, and catering showing recovery; domestic gold jewelry prices surged significantly influenced by changes in international gold prices. However, the average rent for residential properties in 50 cities fell 0.5% month-on-month and 3.7% year-on-year in January, indicating rental demand规模 remains low; prices for durables are expected to decline month-on-month due to increased promotions under new replacement policies; clothing prices decreased with winter apparel discounts. Considering the timing difference of the Spring Festival effect this year, the month-on-month increase in core CPI is weaker than last year, and the year-on-year increase might narrow. Overall, he expects CPI to rise 0.1% month-on-month and 0.2% year-on-year in January. Based on PMI indicators and high-frequency data, he also anticipates PPI to continue its month-on-month increase in January, with the year-on-year decline narrowing to around -1.4% from -1.9% in December last year.
---------------------------------------------------- **Best Forecasting Economists for December 2025 - January 2026 Predictions (CPI):** Cai Wei: 0.3% Cheng Shi: 0.5% Wen Bin: 0.2%
**Best Forecasting Economists for December 2025 - January 2026 Predictions (PPI):** Cai Wei: -1.2% Cheng Shi: -1.7% Wen Bin: -1.3% Wu Ge: -1.4% ----------------------------------------------------
**January Financial Data Expected to Rise Seasonally** In this survey, chief economists forecast that, due to seasonal factors, new yuan loans in January will surge significantly to 4.97 trillion yuan from 910 billion yuan the previous month. Their average forecast for new total social financing (TSF) is 7 trillion yuan, and for the year-on-year growth of M2 money supply, it is 8.4%.
Lu Zhengwei of Industrial Bank mentioned regarding credit that a "good start" is expected in January, but the overall level is likely weaker than the same period in 2025. For TSF, government bonds being "front-loaded" will support TSF增量, but credit投放 is weaker than in January 2025; he expects a slight year-on-year decline in TSF. Calculations suggest the total net financing scale of government bonds in the first quarter will be slightly lower than in 2025, but the issuance节奏 within the quarter will be more balanced. Based on bond issuance and maturity statistics, he predicts the government bond component in January to be about 1.18 trillion yuan, 480 billion yuan higher year-on-year, helping stabilize TSF year-on-year growth.
**Interest Rates & RRR: Low Probability of Change in February** Economists believe the likelihood of a cut in the Loan Prime Rate (LPR) or the reserve requirement ratio (RRR) for major financial institutions in February is small, but the central bank may still choose to reduce RRR or interest rates at some point during the year.
Cheng Shi of ICBC International thinks that, in terms of aggregate tools, room for RRR cuts and small interest rate cuts still exists in 2026. Operations are more likely to be phased and温和推进, with quantity tools acting ahead and price tools following prudently, collectively improving the liquidity environment and policy transmission efficiency.
**Exchange Rate: Average Year-End 2026 USD/CNY Forecast at 6.8** On January 30, the central parity rate of the renminbi against the US dollar was 6.9678. Economists expect this rate to remain stable in February, with their average forecast for the end of February being 6.9. Their average forecast for the year-end rate is 6.8.
Wen Bin of China Minsheng Bank expects the renminbi exchange rate to maintain a pattern of stable two-way fluctuations in February. He notes that since January, the US dollar index has震荡大幅走弱, and the renminbi has continued to appreciate against the dollar, with the central parity rate breaking through 7. Internationally, although US job market growth has slowed significantly, it has stabilized, and the economy shows strong resilience. US GDP grew at an annualized rate of 4.4% quarter-on-quarter in Q3 2025, slightly higher than the initial estimate of 4.3% and the previous quarter's 3.8%, showing no signs of recession currently. However, Fed Chair Powell's dovish stance during the interest rate meeting, coupled with increased market concerns about Fed independence and fiscal conditions, led to dollar weakness. Particularly, comments from Donald Trump about being able to make the dollar fluctuate "like a yo-yo" triggered sharp market reactions, pushing the dollar index to a new low since March 2022. Subsequently, the dollar index recovered somewhat after Trump nominated the relatively hawkish Kevin Warsh for Fed Chair.
Domestically, with marginal improvement in external demand and the release of policy effects, industrial added value and the services production index rebounded year-on-year, with high-tech manufacturing and producer services leading the way, but investment and consumption remain weak. Affected by seasonal factors, the Manufacturing PMI, Services Business Activity Index, and Construction Business Activity Index all declined to varying degrees in January, indicating同步走弱 in both internal and external demand, but prices are明显走高. In the foreign exchange market, the settlement rate rose significantly in December, while the purchase rate declined noticeably, with overall stable operation.
**Official Foreign Exchange Reserves: Data Released for End-January was $3,399.1 Billion** Data from the State Administration of Foreign Exchange showed that as of the end of January, China's foreign exchange reserves stood at $3,399.1 billion, an increase of $41.2 billion from the end of December 2025, a rise of 1.23%.
Wen Bin of China Minsheng Bank stated that in January, influenced by multiple factors, the US dollar continued its weak trend. Combined with the effects of asset price changes and exchange rate fluctuations, foreign reserves increased by $41.2 billion month-on-month to $3,399.1 billion at the end of January. In terms of exchange rates, the US dollar index fell 1.4% in January to 97, having一度跌至 a four-year low around 95 during the month. Non-US currencies generally appreciated, with the Japanese Yen, Euro, and British Pound rising 1.23%, 0.9%, and 1.6% against the dollar, respectively. Regarding asset prices, the yield on the 10-year US Treasury note rose 8 basis points to 4.26%. Global stock markets were overall volatile but stronger, with the S&P 500 index up 1.4% month-on-month, the Europe Stoxx index up 3.4%, and the Tokyo Nikkei index up 5.9%. In terms of cross-border capital flows, the long-term allocation willingness of foreign investors for renminbi assets is steadily improving, securities investment maintained a reasonable规模 of net inflow, and foreign direct investment remained stable. With持续加码 in policies facilitating cross-border investment and financing, the attractiveness of the capital market to foreign capital will持续增强. The stable and progressive operation of China's economy, with further demonstrated resilience, provides strong support for keeping the foreign exchange reserve规模 basically stable.
**Policy Outlook** Lian Ping of the Guangkai Chief Industry Research Institute believes there is still some room for moderately easy monetary policy regarding interest rate and RRR cuts, and the operational intensity of structural tools will be greater. Currently, market liquidity is ample, reducing the necessity for large-scale RRR cuts while outright reverse repos and government bond买卖 remain unchanged, but small RRR cuts of 0.25 to 0.5 percentage points are still possible to supplement banks' medium-to-long-term liquidity and coordinate with government bond issuance. In 2026, major developed countries overseas will maintain loose monetary policies, and the renminbi is in an appreciation cycle, providing a阶段性 window for interest rate cuts in China. Comprehensively considering pressure on bank net interest margins, the central bank might lower policy interest rates by 0.1 to 0.3 percentage points in 2026 to reduce social financing costs, accelerate credit repair, and stimulate consumption and investment demand growth. A 500-billion-yuan new政策性 financial tool will likely continue to be arranged to supplement project capital金,持续 supporting government investment.
Fiscal policy in 2026 will continue to be more proactive, improving precision and effectiveness, maintaining necessary fiscal deficits, total debt规模, and expenditure总量, optimizing fiscal expenditure structure, and standardizing tax incentives and subsidy policies. The annual deficit ratio might be arranged between 4% and 4.2%; the deficit规模 could increase to 6-6.25 trillion yuan, providing stable funding sources for fiscal expenditure. An issuance quota of 1.5 trillion yuan for ultra-long-term special treasury bonds is anticipated, 200 billion yuan more than in 2025,持续 supporting "Two Heavy" projects and "Two News" initiatives. Possibly, 500 billion yuan in special treasury bonds or ultra-long-term special quotas might be allocated for establishing a real estate stabilization fund,追加化债额度, and replenishing capital for small and medium-sized banks. Local government special bond quotas are expected to be 4.8 trillion yuan, 400 billion yuan more than in 2025,用于 infrastructure investment, livelihood保障, etc., with部分专项债 funds continuing to be used to acquire existing commercial housing and idle land to hedge against downside risks in the real estate market. Based on these estimates, the total new government debt规模 in 2026 might exceed 13 trillion yuan, and the broad fiscal deficit rate is projected to rise to around 8.8%.
Cheng Shi of ICBC International stated that at the policy level, macro-regulation in 2026 will place greater emphasis on the coordinated efforts of aggregate and structural policies, aiming primarily to promote a reasonable recovery in prices and stabilize expectations. Fiscal policy is expected to remain proactive, providing a floor for expanding domestic demand through government investment, special bonds, and the expansion of "Two News" policies. Monetary policy will maintain适度宽松 and precise滴灌 under multiple constraints. Structural monetary policy will持续 focus on stabilizing employment, promoting consumption, and cultivating new growth drivers, with tools like service consumption and pension relending有望 expanding.
Wu Ge of Changjiang Securities believes that based on recent local "two sessions," adjusting downward the expected economic growth target seems to be a trend, and short-term counter-cyclical policies might remain prudent. Local government land transfer revenue faces further pressure, while社保 employment and other livelihood expenditures remain rigid under the基调 of "investing in people." The rise in bill discount rates is less than historical averages, indicating credit投放 remains weak. Interest rate adjustments will focus more on structure, and the substitution of bonds for credit may continue.
The list of 13 economists participating in this edition of the "Yicai Chief Economist Monthly Survey" is as follows (in alphabetical order by Pinyin): Cai Wei: Dean, KPMG China Economic Research Institute Cheng Shi: Head of Research, ICBC International; Managing Director, Chief Economist Ding Shuang: Chief Economist, Greater China, Standard Chartered Bank Zhu Feng: Chief China Economist, J.P. Morgan Guan Qingyou: President, Rushi Financial Research Institute Guan Tao: Global Chief Economist, BOC International Lian Ping: President and Chief Economist, Guangkai Chief Industry Research Institute Lu Zhengwei: Chief Economist, Industrial Bank Wang Han: Chief Economist, Industrial Securities Wen Bin: Chief Economist and Dean of Research Institute, China Minsheng Bank Wu Ge: Chief Economist, Changjiang Securities Xie Yaxuan: Deputy Director, Research and Development Center, China Merchants Securities Zhou Xue: Economist, Mizuho Securities Asia