The Central Economic Work Conference was held in Beijing from Dec. 10 to 11, laying out the economic priorities for 2026. The outcomes generally aligned with market expectations, highlighting a commitment to maintaining strategic focus during the economic transition phase. The conclave emphasized both counter-cyclical adjustment and structural reforms, reflecting a proactive and forceful policy orientation.

1. Economic Assessment: Generally Positive with a Focus on Unlocking Potential

The conference noted that challenges arising from development and transition remain overall controllable, asserting that the supporting conditions and fundamental trends underpinning China's long-term economic growth remain unchanged. Compared to last year, there is a heightened emphasis on tapping into economic potential and strengthening internal resilience. Sun Binbin, Chief Economist at Caitong Securities, expects the economic growth target for the coming year will likely remain around 5%.

2. Fiscal Policy: Balancing Magnitude and Cadence

The conference maintained the descriptor of "implementing a more proactive fiscal policy" while adding a new directive to "maintain the necessary fiscal deficit, total debt scale, and aggregate expenditure." In terms of overall volume, Sun expects the deficit-to-GDP ratio to be maintained at 4% next year to ensure a sustained and appropriate level of fiscal spending.

3. Monetary Policy: Moderately Loosening While Maintaining Flexibility

Sun anticipates that future monetary policy will be more closely anchored to economic growth, inflation, and the restoration of confidence, rather than adjusting the scale of easing solely based on financial data. This will be supplemented by structural tools designed to support key areas such as expanding domestic demand, technological innovation, and small and medium-sized enterprises (SMEs).

4. Structural Policies: Highlighting Key Drivers, De-emphasizing Short-term Stimulus

First, "new policy-based tools" and "energy-saving and carbon-reduction upgrades in key industries" are expected to serve as the primary drivers for stabilizing investment. Second is the continued regulation of the real estate market. Third is an emphasis on rectifying "involuted" (cut-throat) competition. Fourth is a focus on new strategic approaches for international trade and economic cooperation.

Sun Binbin stated that 2025 marks the conclusion of the 14th Five-Year Plan, while 2026 is the inaugural year of the 15th Five-Year Plan. This transitional phase implies that policy objectives will place greater emphasis on inter-temporal coordination and medium-to-long-term sustainability. In this context, he suggested the market should closely monitor month-on-month changes in M1 and the Producer Price Index (PPI), as these two indicators remain key signals for observing the momentum of economic recovery.

Media Contact
Company Name: Caitong Securities
Contact Person: Yi Tong
Email: Send Email
City: Hangzhou
Country: China
Website: www.ctsec.com