China Research

China’s political leadership continues to reduce its previously high growth expectations. This became clear when Prime Minister Li Qiang announced the official GDP-growth objective during the opening of the annual National People’s Congress (NPC) on March 5. The envisaged growth range for 2026 – now settled at 4.5-5 percent – means some downsizing compared to the corresponding plans one year ago (then around 5 percent for 2025). 4.5 percent is – by the way – exactly the GDP-growth number that was noted last year in Q4 – but 0.3 lower than in Q3. It can be added that recent statistics continue to show disappointing statistics for retail sales and real estate markets.

Lowest expectations since 1991

Decreasing growth expectations in China cannot be regarded as a new growth phenomenon but have been going on already for a number of years (https://tradingeconomics.com/china/gdp-growth-annual). Sure, the Chinese prime minister talked at the NPC about complex conditions domestically and abroad when explaining the (slightly) weakening growth goals. On the other hand, there has been a downward trend of Chinese GDP growth already for quite some years and not only recently.

This conclusion leads to the interesting question whether Chinese economic growth de facto even could be lower than officially reported. In the past, there have been frequent doubts about such an interpretation of poor statistical standards, particularly when growth rates seemed to be disappointing – but also the other way around in boom years when GDP growth often was estimated as higher in reality than officially announced (https://blogg.lnu.se/china-research/?p=1729; https://blogg.lnu.se/china-research/?p=3479;https://publications.bof.fi/bitstream/handle/10024/44981/172270.pdf?sequence=1&isAllowed=y).

Of course, we still do not know enough about China’s real growth performance more recently. However, historical experience in this specific growth aspect is not very encouraging in an environment of lagging transparency.

Growth concerns inside China create growth concerns outside China

Altogether, there is good reason to believe that China remains confronted with obvious  growth problems which only cautiously is admitted by China’s political leadership (https://www.chinadaily.com.cn/a/202603/05/WS69a8f737a310d6866eb3bdfd.html ). Not even different growth stimuli more lately could give strived growth effects, at least not according to my own interpretation,

Consequently, still stronger Chinese export efforts to non-protectionist countries cannot be ruled out in the forthcoming quarters and beyond. Such moves could be important to explain to the Chinese people that their political leadership still has tools to manage the economy successfully. This psychological aspect should not be neglected!

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University