China Economy 2026: Slowdown, imbalance and fresh Beijing priorities

The end of the year 2025 brings cooling

In late 2025, the Chinese economy presents a image full of contradictions. On the 1 hand, Beijing has achieved its GDP growth mark of around 5%, while avoiding the request for powerful stimulus packages. On the another hand, the latest figures for November signal a clear weakening of momentum and a fixation of deep structural imbalances. The year 2026 is forecast to be a period of slower growth, in which not so many will be key as the strategical choices and priorities of the Chinese authorities in the face of expanding interior and external challenges.

Unsustainable growth: 2 faces of the Chinese economy

China's growth model in 2025 was based on 2 pillars:

• relatively strong industrial production and
• dynamic exports.

These factors allowed the GDP mark to be achieved, but masked the fundamental weakness in home demand. Private consumption and investment remained behind, as confirmed by the “two speed” economical thesis. Growth was driven by production capacity and political support for selected sectors, not by extended improvement of consumer sentiments or investment booms in the private sector. This disparity is becoming increasingly apparent and represents a central challenge for the coming year.

Property sector: Unsolved problem inhibits development

The biggest brake on the Chinese economy remains the unresolved real property crisis. The data for 2025 are alarming: investments in real property improvement fell by nearly 16% and the sale of real property by more than 11%. This situation has far-reaching consequences, affecting the finances of local governments, the assurance of households (whose property is mostly located in real estate) and the appetite for risks in the banking sector. Beijing, despite pressure, avoids an extended rescue program, preferring targeted action to prevent violent collapse. Analysts agree that this is simply a structural problem that will take years to resolve and that the real property sector will no longer be able to act as the main driver of growth.

Poor consumption: deficiency of assurance with key constraints

Consumption proved to be the weakest link of the Chinese economy in 2025. Retail sales in November only increased by 1.3% year-on-year, which is the slowest pace since the end of “zero-COVID” policy. This weakness is not so much due to a deficiency of liquidity but to a deep crisis of trust. Uncertainty in the labour market, advanced youth unemployment and concerns about the decline in property value prompt households to save alternatively than spend. Beijing authorities see the problem and for the first time on Central economical Labour Conference (CEWC) identified the increase in household income as the most effective way to stimulate consumption. This means changing strategies from short-term subsidies to more sustainable social policy solutions.

Foreign trade: Stabilizer with expanding restrictions

In 2025, exports were an crucial stabiliser for the Chinese economy, allowing Beijing to keep a more restrained fiscal policy. Despite trade tensions, Chinese exports increased, and the trade surplus in the first 11 months of the year reached evidence levels of over $1 trillion. However, this success has a price. The evidence surplus increases criticism by trading partners and increases the hazard of introducing fresh customs barriers. Moreover, the export structure is uneven – while deliveries to developing countries and Europe grew, exports to the United States declined sharply. By 2026, expanding protectionism in the planet can make reliance on exports as the main growth buffer impossible.

Perspectives for 2026: Lower growth and fresh policy priorities

Analysts agree that in 2026 the growth rate of Chinese GDP will slow down, with forecasts oscillating around 4.5%. However, a change in political priorities will be more crucial than a circumstantial number. Beijing signals a departure from the real property and dense manufacture investment model for “New advanced Quality Production Forces”. This means focusing on advanced technologies, green transformation, biotechnology and the digital economy. At the same time, fiscal policy is to be more expansive and spending more on social services specified as wellness care, education and care for the elderly. The goal is to “invest in people”, which is to increase productivity and build sustainable foundations for interior demand.

Year of redefinition of the improvement model

The year 2026 will be for China a year of recalibration, not expansion at all costs. Structural challenges specified as the real property crisis, the weakness of home request and the expanding tensions in global trade force Beijing to redefine its improvement model. For global business, this means adapting the strategy. Opportunities should be seen in sectors supported by the government under the “New Production Forces” and in the increasing importance of consumption of services. At the same time, companies must be prepared for greater volatility, unpredictability of policies and the request to compete on the basis of efficiency and innovation, not just the scale of action on a mass market.

Source:

China Briefing, “China’s Economy November 2025: Year-End Review and 2026 Outlook”

Deloitte, “Outlook of macro economy and industries in 2026”

Asia Society Policy Institute, “China’s Next Move: economical Priorities and Policy Shifts for 2026”

Leszek B. Glass

Email: [email protected]

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