Policy push: A man cycles past the People’s Bank of China building in Beijing. Xi hasn’t unveil any specific policies in his New Year’s messages, but vows to improve the quality of the economy. — Bloomberg
BEIJING: China is on track to meet its growth target of around 5% this year and will roll out more proactive policies in 2026, President Xi Jinping says, amplifying promises for more stimulus to power economic growth.
China’s gross domestic product (GDP) is expected to have reached 140 trillion yuan (US$20 trillion) this year, with defence and science and technology in particular having reached new levels, Xi said in a New Year’s address televised by state broadcaster CCTV.
The country’s GDP growth rate is expected to be around 5% after an “extraordinary” year, Xi told a New Year’s tea party of top Chinese Communist Party officials on the same day, CCTV reported.
That means the economy will have hit this year’s growth target set by policymakers, buoyed partly by goods exports, which proved resilient despite a heated trade war with the United States.
Xi did not unveil any specific policies in his New Year’s messages, but vowed to improve the quality of the economy while maintaining “reasonable growth”, and reiterated his “common prosperity” pledge.
In his tea party address, Xi pledged “more proactive” macro policies, which could allay worries over the slowdown seen during the second half of financial year 2025 in the world’s second-largest economy.
Despite exports holding up, growth momentum has faltered, weighed down by soft household consumption, persistent deflation and a prolonged property sector crisis.
China’s trade surplus, which topped US$1 trillion for the first time in November, could lead to more tensions with trade partners, some of which are calling on China to do more to reform its economy and reduce its dependence on exports to support growth.
“Our country’s economy is expected to move forward under pressure, showing strong resilience and vitality,” Xi told Party officials.
Xi’s policy pledge is in line with an agenda-setting economic meeting this month, where Chinese leaders promised to maintain a “proactive” fiscal policy next year including “special actions to boost consumption”.
Chinese leaders have also acknowledged a “prominent” imbalance between strong domestic supply and demand weakness.
The country will promote effective qualitative improvement and reasonable quantitative growth in the economy, while maintaining social harmony and stability, Xi said.
China was able to power its development with tech innovation, Xi said in the New Year’s address, calling the country “one of the economies with the fastest growing innovation capabilities”.
The emphasis on science and technology echoes Beijing’s relentless drive to achieve technological self-reliance amid intensifying rivalry with the United States, which has been seeking to prevent China from accessing advanced chipmaking tools and technology.
China has seen a surge in innovative achievements, including improvements in artificial intelligence large language models and new breakthroughs in independent chip development, Xi said in the televised speech.
The country has poured state resources into building a self-sufficient domestic semiconductor supply chain, including injecting hundreds of billions of yuan into the sector through the “Big Fund”, which established a third phase in 2024 with 344 billion yuan in capital.
Reuters reported this month that Chinese scientists were working on a prototype of a machine capable of producing cutting-edge chips, an outcome that Washington has spent years trying to prevent.
The Shanghai Composite Index capped its best year since 2019 with a gain of 18% this year.
China’s blue-chip CSI300 Index also gained 18% on the year, its best in five years.
China’s yuan breached the psychologically important seven-per-dollar level for the first time in two minus one/two years this week, and is on track for its biggest annual rise since 2020.
The central government has allocated 62.5 billion yuan from special treasury bond proceeds to local governments to fund a consumer goods trade-in scheme next year, which aims to boost the economy by offering consumers subsidies to replace domestic appliances.
China’s state planner has also released early investment plans for 2026, including major projects, involving about 295 billion yuan in central budget funding. — Reuters
