Nation on track to hit GDP target
Confidence in China's economic prospects remains strong among officials, economists and global business leaders, as the world's second-largest economy continues to demonstrate resilience, vitality and long-term growth potential despite external headwinds.
They said China remains well positioned to achieve its annual growth target of 4.5 to 5 percent, and make further progress in innovation-led growth supported by a solid start to the year, effective macro policy support and the rapid expansion of new growth drivers.
With buoyant growth prospects, a vast domestic market and expanding innovation capacity, China will continue to be a key growth engine for the rest of the world, they added.
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Jiang Ying, chair of Deloitte China, said she is confident in the long-term prospects of the Chinese economy, citing its consistent performance in recent years and a strong first quarter as signs of underlying resilience.
"I'm very confident about the long-term prosperity of the Chinese economy," Jiang said in an exclusive interview with China Daily on the sidelines of the 2026 Summer Davos forum. "The Chinese market provides certainty to the world."
At a time when global businesses are facing rising uncertainties, China's stable expectations and predictable growth have become increasingly valuable, she said.
"Predictability and stability are probably the best dividend and the greatest advantage that the Chinese market now offers to the global economy," Jiang said. "That is what everyone is looking for amid rising uncertainties."
The forum, also known as the World Economic Forum's 17th Annual Meeting of the New Champions, was held under the theme "Innovating at Scale" in Dalian, Liaoning province, from June 23-25.
"The theme of this forum is very fitting for China — innovating at scale," said Ben Dawson, president of Cisco Asia-Pacific, Japan and Greater China.
Dawson told China Daily that China's long-term appeal lies not only in the scale of its market, but also in its ability to translate technological ambition into large-scale industrial applications.
With a presence in China spanning 32 years, Cisco has witnessed the country's digital transformation and the growing momentum of its AI development, supported by a strong industrial base, sustained investment in manufacturing and the faster adoption of advanced technologies across traditional sectors, Dawson said.
Such confidence in China's growing innovation strength is echoed by other multinational companies with long-term operations in the country.
Yin Zheng, executive vice-president of China and East Asia operations at French industrial conglomerate Schneider Electric, said China has become an important engine of global economic growth and a key source of technological and industrial innovation.
"China's solid energy foundation and strong industrial system have reinforced each other, creating powerful momentum for innovation to be developed and applied at scale," Yin said on the sidelines of the 2026 Summer Davos forum.
"China is now one of Schneider Electric's four major global research and development bases, and an important source of innovation and growth for us," Yin said."Leveraging China's innovation strengths, Schneider Electric will continue to increase its investment in research and development in the country."
Echoing that view, Ruan Fang, managing director and senior partner at Boston Consulting Group, told China Daily that China's strongest growth opportunities are emerging in advanced manufacturing and artificial intelligence.
China, the world's second-largest economy, has grown into a major hub of innovation, driven by its vast domestic market and a significantly faster pace of iteration, she said.
The latest official data also underscored the strong momentum of China's new growth drivers and innovation-related sectors.
In the first five months, industrial enterprises with annual main business revenue of at least 20 million yuan ($2.93 million) reported total profits of 3.14 trillion yuan, up 18.8 percent year-on-year, with the growth rate accelerating by 0.6 percentage point from the January-April period, data released by the National Bureau of Statistics showed.
The electronics manufacturing sector remained a major growth engine, with profits surging 103.9 percent year-on-year in the first five months and contributing 43.1 percent to the overall profit growth of major industrial firms, according to the NBS.
"The rapid advance of artificial intelligence worldwide has spurred a surge in demand for advanced computing and memory chips, providing a strong boost to profit growth in the electronics sector," said Yu Weining, a statistician at the bureau.
High-tech manufacturing also maintained solid growth, with profits rising 44.7 percent year-on-year in the first five months, NBS data showed.
Wang Guanhua, a spokeswoman for the NBS, said at a news conference on May 18 that one of the most notable features of China's current economic performance is the faster transition from traditional growth drivers to new ones.
"China has made fresh progress this year in upgrading industries, empowering development through digital technologies and advancing green transformation," Wang said."The continued growth of new quality productive forces has provided important support for economic expansion."
The strong momentum in advanced manufacturing and AI-related sectors has further bolstered optimism among global financial institutions about China's growth prospects.
Deutsche Bank has upgraded its forecast for China's 2026 real GDP growth to 4.9 percent, after the country's first-quarter growth came in stronger than expected.
NBS data showed China's GDP reached 33.42 trillion yuan in the first quarter of 2026, expanding 5 percent year-on-year in real terms and hitting the upper end of the country's annual growth target range.
Alexander von zur Muehlen, CEO of Deutsche Bank for Asia-Pacific, Europe, Middle East & Africa, and Germany, said the bank's confidence in the Chinese market is rooted in the country's continued shift toward high-quality development and the further opening-up of its financial markets.
Deutsche Bank is not alone in taking a more positive view. Morgan Stanley in May lifted its forecast for China's GDP growth this year to 4.8 percent from 4.7 percent.
Robin Xing, chief China economist at Morgan Stanley, said the revision was supported by resilient exports and robust AI — and green-related investment, which are expected to generate positive spillovers for industrial upgrading and capacity modernization.
Although China's monthly macroeconomic indicators for April and May showed some moderation in consumption and investment, analysts said the broader recovery remains on solid footing, supported by resilient exports, strong manufacturing capabilities and the continued expansion of new growth drivers.
Looking ahead, China is scheduled to release its second-quarter economic growth data on July 15. Wen Bin, chief economist at China Minsheng Bank, said GDP growth may ease to around 4.5 percent in the second quarter, but would still remain broadly in line with the country's annual growth target range, underscoring the economy's underlying resilience.
In particular, Wen said the moderation in real GDP growth should be viewed alongside improving price conditions, which could point to a broader recovery in nominal activity.
With PPI growth continuing to pick up in April and May and CPI staying above 1 percent year-on-year in both months, the GDP deflator is likely to return to positive territory after 12 consecutive quarters of contraction, he said.
"That would help improve nominal GDP growth," Wen added.
A recent report by the China Macroeconomy Forum also struck an optimistic tone, saying China's economy is likely to follow a U-shaped trajectory this year as pro-growth policies and major projects are gradually rolled out and their effects become more visible.
With policy support continuing to take effect, the report said, China has a solid foundation to achieve its annual growth target of 4.5 to 5 percent in 2026.
Still, economists said the structural divergence in the economy deserves close attention.
While industrial production and exports have continued to show resilience, consumption has shown signs of moderation — a trend that underscores the need for stronger policy support to further unlock domestic demand and consolidate the recovery momentum, economists said.
Luo Zhiheng, chief economist and head of the research institute at Yuekai Securities, said the uneven recovery reflects the broader structural transition underway in China's economy.
New growth drivers such as artificial intelligence and high-end manufacturing are gradually taking the place of older engines such as real estate and infrastructure investment, Luo said.
Taking a broader view, Huang Yiping, dean of Peking University's National School of Development, said that despite the challenges facing the Chinese economy, the country has been steadily advancing economic rebalancing.
"If you look at the trajectory of the Chinese economy over the past 20 years or more, the macroeconomic structure is much better now," Huang said at a forum during the 2026 Summer Davos forum.
However, he also cautioned that the rebalancing process remains far from sufficient, especially as domestic consumption still needs to play a stronger role in supporting growth.
"China needs to boost consumption, and it needs to do so in a more proactive way," Huang said.
Luo said the recovery of domestic demand hinges on whether the economy's key transmission mechanisms can be further smoothed.
For households, stable employment and stronger income growth are essential to improving consumer confidence and willingness to spend, he said.
For businesses, a recovery in demand needs to translate into stronger profits and renewed capital expenditure, Luo said.
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In the property sector, stabilizing home prices will be important for restoring sales momentum and reviving investment, he added.
Wen said policy support is expected to be further strengthened around midyear, with fiscal and monetary measures working together to stabilize growth.
On the fiscal front, special-purpose bond issuance is likely to accelerate in the second half of the year, while new policy-based financial instruments are expected to be gradually channeled into concrete projects, helping support major projects and infrastructure investment, according to Wen.
On the monetary front, the policy window for interest rate and reserve requirement ratio cuts may open as PPI growth peaks around midyear, leaving room for more timely policy adjustments, he added.
"More incremental policies are expected to boost consumption, stabilize the property sector and support employment," Wen said."Together, these measures will help stabilize the economy and strengthen the recovery momentum."
Contact the writers at zhangchenxu@chinadaily.com.cn
