【Two Sessions 2026】Citibank: Mainland China's GDP target is expected to be on the higher end of the range; focus on policy implementation力度

2026-03-06 09:01:28

Abstract generation in progress

The central government has set this year’s economic growth target at 4.5% to 5%, the most moderate level since 1991. Citi stated that the target aligns with market expectations, but considering the authorities’ emphasis on “striving for better results,” it is expected that the decision-making level will aim for a slightly higher range as the actual goal. Additionally, Citi noted that attention is focused on policy implementation strength, with the next policy adjustment period being the mid-year Politburo meeting.

Apart from the economic growth target, the market is also concerned about inflation. Citi pointed out that the authorities emphasize promoting a moderate rebound in consumer prices, indicating that “reflation hopes are now on the horizon.” According to their estimates, China’s nominal GDP growth in 2026 will rise from about 4% in 2025 to 5%, with real GDP growth forecasted at 4.7%, implying that the GDP deflator will slightly turn positive this year (0.3%).

The GDP deflator, an important indicator of inflation, reflects overall price changes in the economy.

Fiscal Policy Scale and Intensity Below Expectations

Regarding fiscal policy, Citi admitted that the scale of fiscal stimulus is below their expectations, and fiscal力度 is expected to remain roughly the same as in 2025. Newly issued ultra-long-term special government bonds (CGB) and local government special bonds (LGB) are also unchanged from last year, with the main expansion coming from off-budget policy financing.

Additionally, the central government plans to issue 300 billion yuan (RMB) in special bonds to support the capital replenishment of state-owned banks. Citi pointed out that the bond issuance scale is lower than expected, as they initially anticipated including 300 billion yuan in bank capital injections plus an additional 200 billion yuan for insurance companies.

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