China’s economic growth slowed as the year progressed; 2026 policy priorities unveiled

China’s National Bureau of Statistics (NBS) reports that industrial output growth in November slowed to 4.8 %, while real retail sales growth slowed to an estimated 0.6 % y-o-y. The trend in fixed investment also faltered as the contraction in nominal investment accelerated to 2.6 % for the January-November period. While no data on real growth in fixed investment in recent months has yet been released, real fixed investment growth for all of 2025 might still remain in positive territory, with data from June showing a decline in investment prices of 2–3 % y-o-y. The rise in consumer prices, on the other hand, has accelerated in recent months, even if the rate of price increase remains modest (0.7 % y-o-y in November). Part of the rise in November inflation reflected the fact that food prices have ceased to decline.

The Central Economic Work Conference, which is held annually in mid-December, charts out the coming year’s economic policy priorities and targets. This year’s work conference offered little new to previous announcements on planned economic policies, and planned policies are in line with outline of the new 5-year plan released in October. The main policy priority is strengthening domestic consumer demand. In addition, central government is planning to increase funding of fixed investment and will continue accelerate technological development with on measures. The work conference promised also measures to curb excessive competition, involution (a China-specific phenomenon of intense, often futile and self-defeating, competition), as well as stabilise the real estate sector and improve the employment situation of young people and internal migrants. Greater attention will also be paid to the financial issues dogging local governments.

The work conference typically sets the GDP growth target for next year, but leaves its public announcement until the following March. Many observers expect the new target to be the same as this year (“around 5 %”). Most major forecasters, on the other hand, anticipate actual GDP growth closer to 4 %. Notably, the IMF just raised its 2026 forecast to 4.5 %.

China’s economic growth slowed in the final months of this year

Sources: China National Bureau of Statistics, CEIC and BOFIT.