Chief Economist's 2026 Outlook: Fiscal and Monetary Policy Working in Tandem, Economic Recovery Continues

Our reporters Liu Qi and Han Yu

2026 has already begun, and China’s economy stands at a new starting point for development. What will be the economic trend in our country this year? How will fiscal and monetary policies safeguard economic growth? The Securities Daily interviewed several chief economists for in-depth analysis.

Economic Growth Focuses on Structural Adjustment

In 2025, China’s national economy maintained overall stability and steady progress, laying a solid foundation for 2026’s economic development.

On December 31, 2025, the Service Industry Survey Center of the National Bureau of Statistics and the China Federation of Logistics & Purchasing released the China Purchasing Managers’ Index (PMI), showing that in December 2025, the manufacturing PMI, non-manufacturing business activity index, and composite PMI output index were 50.1%, 50.2%, and 50.7%, respectively, up 0.9, 0.7, and 1.0 percentage points from the previous month. All three indices entered expansion territory, indicating a general recovery in China’s economic activity.

Wen Bin, Chief Economist at Minsheng Bank, believes that considering the good performance of leading indicators, the full-year GDP growth rate in 2025 is expected to be around 5.1%, successfully completing the annual target. Since December 2025, macro policies have balanced short-term growth stabilization with long-term momentum cultivation, forming a policy implementation system characterized by central coordination, departmental collaboration, and precise local implementation. This approach features targeted efforts, cross-year continuity, and proactive planning, providing policy support for the start of the 14th Five-Year Plan in 2026.

“Projected real GDP and nominal GDP growth in 2026 will be about 5%,” said Wu Chaoming, Chief Economist at CCB Financial Holdings. He also noted that China’s economic growth momentum in 2026 may experience a historic shift. The contribution of the “Three New Economies” (new industries, new business formats, new business models) to GDP is expected to surpass that of the “real estate economy” (including consumption, investment, and production) for the first time, with significant development of new quality productivity.

“China’s economy will continue its recovery trend in 2026,” said Ming Ming, Chief Economist at CITIC Securities, in an interview with Securities Daily. He added that as the first year of the 14th Five-Year Plan, 2026 is expected to see increased efforts in countercyclical and cross-cycle regulation.

Ming Ming pointed out that in 2026, the focus of economic growth will likely shift more toward structural adjustment rather than purely quantitative growth. Policies will guide consumer structure from being primarily goods-based to service upgrades; simultaneously, policies will boost urban and rural residents’ consumption willingness, better integrating livelihood improvements with consumption promotion.

Policies Continue to Activate Domestic Demand

The recent Central Economic Work Conference emphasized, “We will continue to implement more proactive fiscal policies” and “We will continue to implement moderately easing monetary policies.”

“On fiscal policy, the National Financial Work Conference detailed implementation measures, with the issuance of ultra-long special bonds and government subsidies showing results,” Wen Bin said. The conference held in Beijing on December 27-28, 2025, clarified that “more proactive fiscal policies will continue in 2026.” The “more proactive” approach is reflected not only in increased funding but also in improved efficiency of fund use.

In terms of policy implementation, ultra-long special bonds have taken the lead, with the first batch of 62.5 billion yuan allocated before New Year’s Day, precisely targeting the peak consumption season at year-end and early next year. Simultaneously, government subsidy policies have been rolled out, clarifying standards for old-for-new consumer subsidies, adjusting auto subsidies based on price ratios, focusing on high-efficiency home appliances, expanding subsidies for digital smart products, and helping build a unified national market through standardized subsidies. These measures shift from short-term stabilization to normalized support for domestic demand.

“Moderately easing monetary policy in 2026 will have two main directions,” said Wang Qing, Chief Macroeconomist at Dongxing Securities. In terms of aggregate policy, the People’s Bank of China is expected to continue lowering interest rates and reserve requirements, possibly with a 0.3 percentage point cut in interest rates, with one cut in the first half and another in the second half of the year. Considering factors like economic momentum at year-end and early next year, there is also a possibility that the first round of RRR and interest rate cuts could be implemented before the Spring Festival in 2026.

Wang Qing explained that structurally, the focus will be on effective financial “five big articles,” guiding financial resources to support technological innovation, manufacturing transformation and upgrading, green development, small and micro enterprises, as well as consumption promotion and stabilizing foreign trade. The People’s Bank of China will optimize various structural monetary policy tools, generally increasing their scale and moderately lowering operation rates. Besides promoting the transformation of growth drivers and supporting high-quality development, these tools will also play a role in driving overall credit and social financing growth through structural effects.

“Overall, recent policy coordination efforts have laid a solid foundation for a good start,” Wen Bin said. The macro policies, through early fiscal efforts and precise monetary cooperation, respond accurately to current issues like strong supply but weak demand and insufficient domestic demand. They also lay a long-term foundation through fostering new productivity, investing in people’s livelihoods, and advancing institutional opening. Looking ahead to 2026, as these policies take effect, domestic demand growth will be continuously activated, industrial upgrading will accelerate, and local governments’ differentiated measures will form a complementary force.