China: Growth target softening and policy mix – ING

ING’s Chief Economist for Greater China, Lynn Song, notes that China has lowered its 2026 GDP growth target to 4.5–5.0% after three years of “around 5%”, signalling tolerance for slightly slower expansion while keeping long-term ambitions intact.

ING’s Chief Economist for Greater China, Lynn Song, notes that China has lowered its 2026 GDP growth target to 4.5–5.0% after three years of “around 5%”, signalling tolerance for slightly slower expansion while keeping long-term ambitions intact. Fiscal and employment targets remain broadly stable, and ING forecasts GDP growth of 4.6% year-on-year, within the new official range. "This year's GDP growth target was reduced to 4.5-5.0%, a slight softening from the more ambiguous "around 5%" target set in the past three years.

While it was debatable how much flexibility "around 5%" entailed, most market participants viewed this as within 0.2-0.3pp of 5%. With the new target, there appears to be a tolerance for slower growth, which should give policymakers more flexibility to pursue quality growth, a priority in recent years." "With that said, the 4.5% threshold represents only a rather limited slowdown; China's longer-term growth ambitions remain unchanged.

The government work report outlined an intention for "laying a solid foundation for doubling per capita GDP by 2035 compared to 2020," a key goal set by President Xi in the past." "The softer GDP target was in line with our expectations, as we had hints of this outcome earlier when various provinces also revised growth targets lower. Our GDP forecast for the year is 4.6% year-on-year, which would fall within this range." "In our view, this suggests that while growth stability remains an important objective, the stable fiscal deficit and bond issuance targets indicate a degree of restraint, avoiding relying too much on extra stimulus to drive growth at the cost of growth quality.

This may disappoint some watchers who had hoped for a stronger fiscal stimulus push." "What does this mean for China's economy? The trends we have seen in the past few years are likely to continue, with an increased focus on moving up the supply chain and improving tech self-reliance. The big question mark will be how successful China is in boosting its domestic demand, as domestic confidence remains tepid and continues to restrain this effort." (This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.) The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts.

The content includes notes by commercial as well as additional insights by internal and external analysts. EUR/USD has reversed part of its earlier pullback and is now edging back towards the key 1.1600 level. The rebound follows a knee-jerk in the US Dollar after the latest NFP report showed the US economy unexpectedly lost 92K jobs in February. Meanwhile, the deteriorating geopolitical backdrop continues to lend support to the Greenback, limiting the pair’s recovery.

GBP/USD is falling back toward 1.3300 in the European session on Friday. A cautious market mood and renewed US Dollar uptick drag the pair lower. The focus now remains on the US NFP data and Middle East headlines for fresh trading incentives.  Gold prices staged a turnaround on Friday, reversing the earlier decline and trading just above the $5,170 mark per troy ounce. The yellow metal continues to draw support from safe haven demand linked to tensions in the Middle East, although gains remain measured as investors weigh the prospect of higher inflation.

After the US and Israel struck Iran, the consensus among most experts was for Bitcoin and the crypto market to see another round of sharp declines. Well, it didn’t happen. And almost one week afterward, crypto appears to be weathering the storm much better than other asset classes considered risky.  February payrolls were much weaker than expected for February. The headline number was -92k, lower than the 55k expected for Feb, and the 130k job increases for January.

The unemployment rate ticked up slightly to 4.4% from 4.3%. After the US and Israel struck Iran, the consensus among most experts was for Bitcoin and the crypto market to see another round of sharp declines. Well, it didn’t happen. And almost one week afterward, crypto appears to be weathering the storm much better than other asset classes considered risky.  Information on these pages contains forward-looking statements that involve risks and uncertainties.

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