Bank of America: China may lower its 2026 growth target while maintaining policy support

Investing.com – Bank of America Securities states that China may lower its 2026 economic growth target to a range of 4.5%–5.0%, while maintaining policy support, as policymakers shift their focus to long-term structural priorities in the upcoming 15th Five-Year Plan.

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These targets are expected to be announced at the opening of the National People’s Congress on March 5, along with details on fiscal policy, monetary policy stance, and the draft outline of the new Five-Year Plan.

Bank of America economists say that the slightly lowered growth target reflects ongoing weak domestic demand and persistent structural obstacles, including pressures in the real estate sector, demographic issues, and local government debt burdens. Of China’s 31 provinces, 17 have already lowered their 2026 growth targets, indicating a more cautious tone at the local level.

Despite the overall target reduction, policy support is expected to remain stable. Policymakers have previously reiterated a “moderately loose” monetary policy stance and a “more proactive” fiscal policy approach. Bank of America continues to forecast a roughly 20 basis point cut in policy interest rates this year, along with targeted lending tools to support priority sectors.

On the fiscal front, the deficit rate may stay around 4% of GDP, with increased issuance of special national bonds and local government bonds to direct funds toward infrastructure and strategic projects.

Boosting domestic demand remains a key challenge. Fixed asset investment shrank for the first time in over thirty years in 2025, and consumption has also weakened as early subsidy effects fade. Investors will watch for signals on whether consumption subsidies will be expanded and whether infrastructure spending will accelerate.

The draft of the 15th Five-Year Plan is expected to attract widespread attention, especially regarding its focus on expanding AI applications, increasing the share of consumption in GDP, and managing risks related to local government and real estate sector debt.

Bank of America states that the clarity and implementability of these long-term goals will be crucial in shaping investor expectations for China’s next policy cycle.

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