2026 CHINA ECONOMIC OUTLOOK：NAVIGATING TRANSFORMATION TO REINVENT GROWTH

The overloaded global system underwent an overheated reboot in 2025. As high-interest-rate pressures eased, supply-demand mismatches rectified, and policy realigned with industrial coordination, the world economy diverged from historical trajectories. Within this interplay of recovery and restructuring, new growth framework began to take shape. Entering 2026, momentum accumulated earlier is posed for a breakout. The tension between entropic expansion and contraction has pushed the global economy toward a critical juncture between order and disorder, rapidly amplifying the divergence in growth model between major economies. At this pivotal moment, China has charted a forward-looking strategic course: Institutional certainty to hedge against external volatility; structural upgrade to unlock medium-to-long-term potential; new quality productive forces to spearhead future competitiveness; and strengthening domestic demand ecosystem to activate deep-seated momentum within its massive market. Building on this framework, China is engineering breakthrough renewal across a five-year and even longer cycle: Dynamic transformation: forging cycle-transcending competitiveness through structural optimization, industrial evolution, and systemic reengineering; Demand consolidation: unleashing sustained momentum via reinforced consumption loops within its massive market; Stability anchoring: bolstering economic foundations through policy predictability The convergence of these endogenous forces positions China to maintain around 5% growth during the 15th Five-Year Plan Period’s launch phase (2026)—delivering resilience amid global uncertainty. Concurrently, this internally-driven structural transition is redirecting China’s economy toward a more autonomous, balanced, and sustainable trajectory. Crucially, it lays foundations for achieving basic socialist modernization by 2035 through enhanced innovation ecosystems, industrially advanced value chains; demand-robust circulation systems and risk-resilient institutional framework.

    Harnessing transformation: Forging cycle-transcending advantages through structural proactivity. The 15th Five-Year Plan (“15th FYP) (2026-2030) Proposal explicitly calls for “advancing economic structural optimization and upgrading, refining new growth drivers while revitalizing existing assets.” This directive not only charts the course for structural adjustment but constitutes the core requirement for future growth model transformation. Within this policy framework, China’s economic structure is manifesting three pivotal evolutionary trends that will form critical resilience pillars against global uncertainties over the coming five years.

    Firstly, structural upgrading is evolving from fragmented improvements toward systemic optimization. Traditional, emerging, and future industries are undergoing redefined operational boundaries with significantly enhanced synergies, marking a transition from linear expansion to ecological evolution. Traditional manufacturing consolidates its foundation through premiumization, digitalization, and decarbonization; emerging industries amplify momentum via scaled penetration; future industries secure technological high ground through strategic deployment. This trilateral synergy catalyzes an integrated leapfrogging effect, propelling China's industrial structure toward a higher-order dynamic equilibrium. Secondly, industrial competitiveness is rapidly pivoting from cost advantages to innovation primacy. As new quality productive forces accumulate, the catalytic efficiency among technological breakthroughs, business model innovation, and application diffusion has markedly intensified—forming a high-velocity virtuous cycle driven by innovation. The accelerated diffusion of innovation factors throughout the economic system elevates total factor productivity the decisive competitive variable. This signifies a fundamental shift in industrial growth quality: from input-driven expansion to efficiency-led advancement, authentically entering a new phase of high-caliber competition. Thirdly, a self-reinforcing bidirectional cycle between industrial restructuring and demand sophistication is gaining substantial traction. Supply quality enhancement reciprocally shapes demand expansion, increasingly anchoring economic growth on endogenous drivers. From advanced manufacturing to modern services, and from renewable energy infrastructure to digital consumption ecosystems, structural coupling between supply and demand is intensifying. This dynamic interaction—where superior supply empowers upgraded demand—establishes critical foundations for building a modern industrial system, expanding domestic demand, and strengthening endogenous growth drivers during the 15th FYP period.

    Building upon these three trends, structural upgrading is emerging as the pivotal fulcrum for China to establish order amid global turbulence. Projecting into 2026, manufacturing investment is positioned to sustain growth rates exceeding overall fixed-asset investment. This momentum will not only accelerate equipment renewal and industrial advancement but also amplify innovation diffusion and economic circulation efficiency—ultimately solidifying its role as the core lever for achieving technological self-reliance and expanding domestic demand. As new quality productive forces mature, innovation factors will proliferate faster and penetrate deeper across industrial ecosystems. By the outset of the 15th FYP period (2026-2030), China will forge a technology-autonomous growth trajectory, leveraging structural superiority and systemic resilience to secure strategic initiative throughout the coming five years. 机构：工银国际证券研究有限公司 研究员：Cheng Shi/Jessica Xu/Sherry Yin 日期：2025-11-20

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