The 2026 Government Work Report, covering adjustments to growth targets, reforms, innovation initiatives, domestic demand stimulation, and livelihood safeguards, is packed with substantive content. Recently, chief economists from institutions including HSBC, Citigroup, Standard Chartered, J.P. Morgan, and Deutsche Bank shared their views on the latest policy trends. They perceive the policy signals for 2026 as clear and pragmatic, indicating the start of a new policy cycle that increasingly emphasizes "laying a solid foundation for long-term benefits."
The report sets this year's main development targets, including an economic growth goal of 4.5% to 5%, with efforts to achieve better results in practice. This target aligns with the expectations of several foreign institutions' chief economists. Liu Jing, Chief Economist for Greater China at HSBC Global Investment Research, stated that this target reflects policymakers' heightened focus on achieving qualitative improvements alongside reasonable quantitative growth in economic development, promoting steady and enduring high-quality growth. She noted that the 4.5%-5% range target matches HSBC's previous forecasts. Given that 2026 marks the start of the 15th Five-Year Plan period, Liu Jing also believes this growth target allows room for implementing related reform measures.
Yu Xiangrong, Chief Economist for Greater China and Managing Director at Citigroup, highlighted a key signal from the report: 2026 will be a year of nominal growth resurgence. He indicated the report seeks a more prudent balance between short-term economic operations and long-term structural reforms, avoiding strong stimulus and focusing on foundational work. More importantly, the report explicitly aims to improve supply-demand dynamics and push the general price level from negative to positive territory. Yu emphasized that, beyond growth figures, employment targets are crucial; this year's targets for new urban jobs and the unemployment rate remain firm. He identified "reflation" as another key signal, with the report explicitly targeting a turnaround in the general price level and a moderate recovery in consumer prices. Citigroup estimates suggest the budget report implies a nominal growth rate slightly above 5%, exceeding the real growth target, indicating a need for positive GDP deflator growth. Achieving this would significantly improve industrial enterprise profits and market confidence.
The team led by Ding Shuang, Chief Economist for Greater China and North Asia at Standard Chartered Bank, noted that their 2026 GDP growth forecast of 4.6% has modest upside potential. They stated policy prioritizes high-quality growth while leaving room for structural adjustments. The report's phrasing of "striving for better results" suggests 4.5% may be the growth floor for 2026. Zhu Feng, Chief China Economist and Head of Greater China Economic Research at J.P. Morgan, observed that this year's Government Work Report demonstrates a noticeably more pragmatic policy orientation. While there are adjustments in overall emphasis, it largely continues the planning and priorities of the past year. From a policy perspective, the government recognizes current global conditions and severe economic challenges, proactively arranging responses. Setting the growth target within the 4.5%-5% range is more realistic and increases policy flexibility.
Regarding the macroeconomic policy shift, Citigroup's Yu Xiangrong views the focus as moving from counter-cyclical adjustment to cross-cyclical adjustment—short-term stimulus remains restrained but emphasizes coordination, reserving space for medium-to-long-term structural adjustments and risk prevention. Yu estimates this year's fiscal expansion intensity is roughly on par with last year, with special central government bonds and local government special bond quotas unchanged, and only a CNY 230 billion increase in the general public budget deficit. He expects greater incremental support from quasi-fiscal tools, with the policy financial instrument quota rising from CNY 500 billion to CNY 800 billion. Combined, the total stimulus for this year increases by over CNY 500 billion, aligning with pragmatic growth targets and leaving room for the future.
On monetary policy, Citigroup estimates approximately CNY 80 trillion in household deposits will mature this year. Their renewal at low rates or conversion to demand deposits could notably ease bank interest margin pressures, creating room for interest rate cuts. The resumption of RMB appreciation also alleviates external constraints. However, Yu pointed out a subtle change in the report's wording deserves attention: it emphasizes maintaining "low operation" of overall social financing costs rather than "reduction." Citigroup also anticipates a 50-basis-point reserve requirement ratio (RRR) cut and a 10-basis-point policy rate cut this year, with RRR cuts having higher priority and more room. Furthermore, structural monetary tools will become crucial, providing targeted support to key areas like new productive forces and consumer services, enhancing policy transmission efficiency. Despite restrained fiscal and monetary policies individually, macro-control this year emphasizes coordination to amplify policy effects.
Standard Chartered's Ding Shuang team indicated fiscal support remains substantial, with a planned deficit-to-GDP ratio of 4%. Issuance of ultra-long-term special central government bonds and local government special bonds will maintain considerable scale, directed towards infrastructure, promoting equipment upgrades, and balance sheet repair. The nominal scale of government bond issuance quotas is basically flat with 2025, with a slightly lower share of GDP. Preliminary estimates suggest the broad fiscal deficit rate might decrease to 8%-9% of GDP, compared to a 9% budgeted and 8.1% actually implemented broad deficit rate in 2025. This reflects a policy stance normalization as tariff shock effects gradually fade.
As policy focus shifts from macro to micro levels, the drivers for stimulating domestic demand have also undergone structural changes. Xiong Yi, Chief Economist for Greater China at Deutsche Bank, stated that boosting consumption remains the primary task of this year's macro-policy, with unlocking service consumption potential being the top priority. Through a series of measures—including dismantling supply restrictions in various service sectors, enriching and upgrading consumption scenarios, and improving holiday systems to increase leisure time—the consumption potential of Chinese residents in areas like leisure, tourism, health, and elderly care is expected to be fully unleashed.
Additionally, policy signals stronger regulation aimed at addressing prolonged "involution-style" competition troubling businesses. HSBC's Liu Jing noted that this year's Government Work Report prioritizes "advancing the development of a unified national market" in its reform section and mentions comprehensive use of capacity control, standard leadership, price law enforcement, and quality supervision to tackle "involution-style" competition. Liu believes related measures to standardize industry competition秩序 and local government economic promotion behavior are expected to accelerate implementation within the year. These could further narrow the PPI decline in the short term and achieve a turnaround within the year. In the medium to long term, continuously regulating supply-side competition will be vital for ensuring more efficient, market-based resource allocation, enhancing overall societal innovation vitality and industrial profit margins, thereby providing solid support for high-quality economic development.
Deutsche Bank's Xiong Yi also mentioned that "anti-involution" remains a policy focus, though methods might see slight adjustments. Regulating local government economic promotion and subsidy behavior is considered key to curbing capacity expansion and "involution-style" competition.
Overall, interpretations suggest the 2026 policy signals are clear and pragmatic. On one hand, facing a complex domestic and international environment, policymakers have reserved valuable buffer space for medium-to-long-term reforms by moderately lowering growth targets and maintaining stable overall policy intensity. On the other hand, shifts towards "service consumption" and actions against "involution" indicate policies are attempting to fundamentally unclog economic circulation bottlenecks.
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