Demand-led growth at top of 2026 agenda

China's key economic meeting put "demand-led growth and building a strong domestic market" at the top of next year's agenda, and it also called for "reasonable" growth and a solid start to the 15th Five-Year Plan (2026-30) period.

Experts said the annual Central Economic Work Conference last week showed that there is room to cut the reserve requirement ratio and interest rates next year, with policy rates potentially lowered by 10-20 basis points, and guidance likely to stress on efficiency and proactiveness.

Han Wenxiu, executive deputy director of the Office of the Central Committee for Financial and Economic Affairs, said that since the meeting held by the Political Bureau of the Communist Party of China Central Committee in September 2024, China has successively introduced and implemented a series of policies and measures.

"China will in 2026 introduce and implement incremental policies in response to unfolding circumstances," Han said.

Li Xunlei, chief economist at Zhongtai International Finance Co, said that alongside launching major projects under the 15th Five-Year Plan, the government will step up investment in human capital.

Furthermore, he expected more public funds for social welfare and a higher share of fiscal spending on public services.

Ming Ming, chief economist at CITIC Securities, said policy decisions next year may place less weight on short-term stimulus and focus more on long-term planning for the 15th Five-Year Plan period. He underscored both new measures and thorough implementation of existing ones, with emphasis on coordination and delivery.

Fiscal policy will be more proactive. The fiscal deficit ratio in 2026 may stay at around 4 percent, implying a deficit of about 6 trillion yuan ($845 billion), Ming said.

He added that the government will "carry out special actions to boost consumption and implement urban-rural income growth programs", signaling a demand-side push to lift households' spending power and willingness to spend.

He suggested that the push will come from the demand side. It aims to lift households' spending power and willingness to spend. Supportive measures on jobs and incomes are already in place.

Data from the Ministry of Human Resources and Social Security showed temporary cuts to unemployment insurance contributions reduced firms' labor costs by 138.4 billion yuan, while job retention rebates totaled 19.6 billion yuan, and 16.6 billion yuan supported training and other employment measures.

The nationwide surveyed urban jobless rate continued to fall in October. Employment among key groups such as migrant workers remained stable. The overall stability in jobs has not changed, creating favorable conditions for people's well-being and social stability, said Fu Linghui, spokesperson for the National Bureau of Statistics.

Singapore's Lianhe Zaobao newspaper said in a report that China is refining its policy toolkit, while measures to stabilize jobs and the economy are highly targeted and help steady overall employment.

This view echoes domestic policy signals and market expectations. The initial fiscal budget to be announced at the two sessions in March may be similar in size to 2025, according to Morgan Stanley's chief China economist Xing Ziqiang.

"Next year, the focus will include infrastructure, technological self-reliance, underground pipelines, the green transition, and AI computing centers," Xing said.