A new US-China trade deal has reduced a major uncertainty, allowing policymakers to refocus on boosting the domestic economy. Analysts are upgrading their growth forecasts.
*Key Upgrades & Forecasts:*
* *GDP Growth:* Forecast raised to *4.6%* for 2026 (from 4.3%), within an expected official target of *4.5%-5.0%*.
* *Inflation:* Forecast lowered to *0.6%* (from 1.0%), indicating persistent weak domestic demand.
*The Policy Plan:*
1. *Support Consumption:* Direct policy support to boost household spending, especially as the property market remains weak.
2. *Foster Innovation:* Rapid AI adoption and tech-driven sectors are prioritized as new growth engines.
3. *Prudent Stimulus:* Expect supportive, but *not "ultra-loose,"* fiscal and monetary policy to balance growth with financial stability.
*Bottom Line:* With the trade war on hold, China aims for stable, consumption-led growth powered by innovation, avoiding a massive stimulus splurge.
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