IMF chief hails ‘remarkable resilience’ of nation’s growth despite shocks, as forecasts raised for 2025 and 2026

China’s economy is poised for resilient growth in 2026 and beyond, supported by a pro-growth macroeconomic policy framework and a stronger push to prioritize the shift toward a consumption-driven growth model, leading international and domestic economists said.

They underscored the need to take more forceful measures with greater urgency to bolster household spending — from even more expansionary macroeconomic policies to targeted housing assistance for young people — arguing that a firmer demand foundation will be essential for sustaining medium-term growth.

“Despite sizable shocks, China’s economy has shown remarkable resilience,” Kristalina Georgieva, managing director of the International Monetary Fund, said on Dec 10 in Beijing as the fund completed its annual assessment of the Chinese economy, officially known as the China Article IV consultation mission.

The IMF raised its forecast for China’s economic growth to 5 percent for 2025 and 4.5 percent for 2026 — upgrades of 0.2 and 0.3 percentage points, respectively, from its October outlook — driven by strong exports and fiscal stimulus, Georgieva said.

“In other words, the resilience that China has demonstrated this year will be sustained in 2026,” she said, adding that China is projected to continue to contribute around 30 percent to global growth in the coming couple of years.

Also on Dec 10, the Asian Development Bank revised China’s 2025 growth forecast upward to 4.8 percent, citing stronger-than-expected GDP growth in the first three quarters and new policy support.

The remarks came as markets await the annual Central Economic Work Conference, which is set to offer key clues to China’s 2026 economic agenda as the country seeks a solid start to the 15th Five-Year Plan (2026-30) period.

According to Northeast Securities, China’s economy should grow at an average annual rate of about 4.2 percent from 2026 to 2035 to achieve the goal of its per capita GDP being on par with a mid-level developed country, making a growth target of around 5 percent necessary for 2026.

Analysts cautioned that achieving this growth will require navigating a complex landscape as the traditional engine of real estate remains a persistent drag. They noted that external demand is clouded by geopolitical tensions and protectionism, underscoring the importance of mustering a package of consumption-boosting initiatives.

“China has the opportunity to reach a new stage of development, in which its growth engine switches from investment and exports to domestic consumption, and its economy reorients from goods to services,” Georgieva said.

Boosting consumption is the “overarching policy priority for China”, she said. Along with the potential of China’s vast domestic market, this would result in smaller internal and external imbalances and a more durable source of growth.

China’s consumer inflation recovered to 0.7 percent year-on-year in November, official data showed on Dec 10, as policies to boost domestic demand continued to take effect, driving up the prices of home appliances, clothing, air tickets, household services, and dining.

The IMF recommended even more expansionary macroeconomic policies to support demand and consumption, alongside fiscal policy that prioritizes strengthening the social security system, and scaled-down industrial policies to use fiscal capacity to stimulate consumption and resolve the property sector problem.

According to Georgieva, the protracted property sector slowdown has been a significant drag on consumer confidence. She suggested China take “more determined, more decisive” measures to address this, including allowing unviable developers to exit the market and completing unfinished housing.

The Political Bureau of the Communist Party of China Central Committee held a meeting on Dec 8 to analyze and study the economic work of 2026, stressing the importance of maintaining the leading role of domestic demand.

Minister of Commerce Wang Wentao vowed in a People’s Daily report last week that the country will work to boost services consumption, expand auto purchases, and unlock the potential of green and smart consumption.

Wang Wei, senior researcher and former director of the Institute of Market Economy at the Development Research Center of the State Council, said China’s focus on boosting consumption will inject new growth impetus, projecting that the country’s final consumption expenditure may exceed 90 trillion yuan ($12.7 trillion) during the 15th Five-Year Plan period, accounting for around 60 percent of GDP.

“Services consumption such as education, healthcare, culture, sports, entertainment, and elderly care will have very large room for growth as people’s living standards rise. With the impact of technological innovation, many new forms of innovative consumption are also entering daily life, all forming new drivers of growth,” the researcher said.

Fiscal support for consumption is likely to be bolstered in 2026, she said, adding that the consumer-goods trade-in program is expected to continue. Meanwhile, young people’s housing needs should be better met through subsidies covering works including decoration and renovations, while additional measures could include expanding public holidays and strengthening the implementation of paid leave.

Financial institutions, including CITIC Securities, have projected China’s deficit-to-GDP ratio to remain around 4 percent in 2026 to ensure that more proactive fiscal policy supports demand.

Xu Dongsheng, vice-chairman of the China Household Electrical Appliances Association, suggested that policymakers could introduce differentiated subsidy rates based on a product’s price range and technological sophistication.

Jiang Xueqing contributed to this story.

Contact the writers at zhoulanxv@chinadaily.com.cn