China GDP growth seen at 4.3% in 2026 amid moderating export momentum

China’s real gross domestic product (GDP) growth is forecast at 4.3 per cent in 2026, within a range of 4.1-4.6 per cent, moderating from 2025 largely due to a high export base, according to JP Morgan. Policy support is expected to remain measured but accommodative. Fiscal policy is likely to stay expansionary, with the budget deficit hovering around 4 per cent of GDP, supplemented by lending from policy banks and expanded local government bond quotas.

Monetary policy is expected to focus on fine-tuning rather than aggressive easing. The People’s Bank of China is likely to rely on liquidity operations and reserve requirement ratio adjustments, while avoiding meaningful policy rate cuts to preserve banking sector profitability and financial stability, JP Morgan said in its 2026 Asia Outlook report.

Exports remain the dominant driver of growth, underscoring the uneven nature of China’s recovery. China’s export engine continues to outperform despite rising global protectionism. Real exports are on track to grow around 8 per cent in 2025, lifting China’s share of global exports to about 15 per cent. Exports to the US now account for less than 10 per cent of total shipments, reflecting China’s success in expanding sales across non-US markets.

China’s GDP growth is forecast at 4.3 per cent in 2026 as export-led momentum moderates, as per JP Morgan.
Policy support will remain accommodative, with fiscal expansion and cautious monetary fine-tuning.
Exports continue to drive growth despite rising protectionism and trade frictions.
A weaker yuan and growing AI investment are expected to shape China’s medium-term economic outlook.

While manufacturing capacity is gradually diversifying towards ASEAN and India, these regions remain heavily dependent on Chinese inputs and capital goods. This reinforces China’s central position in global supply chains, even as geopolitical tensions persist.

For global competitors, China’s export strength is intensifying pressure. Japan and South Korea are losing market share in several sectors, while Southeast Asian economies and India, despite export gains, are recording widening trade deficits with China. Replicating China’s manufacturing ecosystem remains difficult due to differences in scale, speed, and state-backed coordination.

Rising competitiveness has also fuelled trade frictions. Since 2024, several economies have introduced anti-dumping and countervailing measures on Chinese products. These barriers are expected to slow export growth in 2026, moderating China’s strongest post-pandemic growth driver, the report added.

Despite a trade surplus exceeding $1 trillion year-to-date, the yuan has weakened by about 4 per cent on a trade-weighted basis. Analysts see limited scope for sustained appreciation, given the managed exchange rate regime and concerns over export competitiveness and deflationary pressures.

Looking beyond traditional drivers, China is accelerating investment in artificial intelligence as a potential new growth pillar. Industry-wide AI and cloud capital expenditure is projected to exceed $70 billion in 2026. While the sector’s near-term impact on headline growth may be limited, it is expected to play an increasingly important role in shaping China’s economic trajectory beyond 2026.

Fibre2Fashion News Desk (SG)