IMF: China's resilience will be sustained

China's economy is poised for resilient growth in 2026 and beyond, supported by a pro-growth macroeconomic policy combination and a stronger push to prioritize the shift toward a consumption-driven growth model, leading international and domestic economists said.

They underscored the need to take more forceful measures with greater urgency to bolster household spending — from even more expansionary macroeconomic policies to targeted housing assistance for young people — arguing that a firmer demand foundation will be essential for sustaining medium-term growth.

"Despite sizable shocks, China's economy has shown remarkable resilience," Kristalina Georgieva, managing director of the International Monetary Fund, said on Wednesday in Beijing as the fund completed its annual assessment of the Chinese economy, officially known as the China Article IV consultation mission.

The IMF raised its forecast for China's economic growth to 5 percent in 2025 and 4.5 percent in 2026 — upgrades of 0.2 and 0.3 percentage point, respectively, from its October outlook — driven by strong exports and fiscal stimulus, Georgieva said.

"In other words, the resilience that China has demonstrated this year will be sustained in 2026," she said, adding that China is projected to continue to contribute around 30 percent to global growth in the coming couple of years.

Also on Wednesday, the Asian Development Bank revised China's 2025 growth forecast upward to 4.8 percent, citing stronger-than-expected GDP growth in the first three quarters and new policy support.

The remarks came as markets await the annual Central Economic Work Conference to offer key clues to China's 2026 economic agenda as the country seeks a solid start to the 15th Five-Year Plan (2026-30) period.

According to Northeast Securities, China's economy should grow at an average annual rate of about 4.2 percent from 2026 to 2035 to achieve the goal of its per capita GDP being on par with that of a mid-level developed country, making a growth target of around 5 percent necessary for 2026.

Analysts cautioned that achieving this growth will require navigating a complex landscape as the traditional engine of real estate remains a persistent drag, while external demand is clouded by geopolitical tensions and protectionism, underscoring the importance of mustering a package of consumption-boosting initiatives.

"China has the opportunity to reach a new stage of development, in which its growth engine switches from investment and exports to domestic consumption, and its economy reorients from goods to services," Georgieva said.

Boosting consumption is the "overarching policy priority for China", she said. This would, along with the potential of China's vast domestic market, result in smaller internal and external imbalances and a more durable source of growth.

China's consumer inflation recovered to 0.7 percent year-on-year in November, official data showed on Wednesday, as policies to boost domestic demand continued to take effect, driving up the prices of home appliances, clothing, air tickets, household service and dining.

The IMF recommends even more expansionary macroeconomic policies to support demand and consumption, fiscal policy that prioritizes strengthening the social security system, and scaled-down industrial policies to use fiscal capacity in stimulating consumption and resolving the property sector problem.

Georgieva said the protracted property sector slowdown has been a significant drag on consumer confidence, and she suggested that China take "more determined, more decisive" measures to address this, including letting unviable developers exit the market and completing unfinished housing.

The Political Bureau of the Communist Party of China Central Committee held a meeting on Monday to analyze and study the economic work of 2026, stressing the importance of maintaining the leading role of domestic demand.

Wang Wei, senior researcher and former director of the Institute of Market Economy at the Development Research Center of the State Council, said that China's priority on boosting consumption will inject new growth impetus, projecting that the country's final consumption expenditure may exceed 90 trillion yuan ($12.7 trillion) during the 15th Five-Year Plan period, accounting for around 60 percent of GDP.

"Service consumption such as education, healthcare, culture, sports, entertainment and elderly care will have very large room for growth as people's living standards rise. With the impact of technological innovation, many new forms of innovative consumption are also entering daily life, all forming new drivers of growth," the researcher said.

Fiscal support for consumption is likely to be strengthened in 2026, she said, adding that the national consumer-goods trade-in program is expected to continue and young people's housing needs should be better met through housing subsidies covering housing, decoration and renovations, while additional measures could include expanding public holidays and strengthening the implementation of paid leave.

Financial institutions including CITIC Securities have projected China's deficit-to-GDP ratio to remain around 4 percent in 2026 to ensure that more proactive fiscal policy supports demand.

Xu Dongsheng, vice-chairman of the China Household Electrical Appliances Association, suggested that policymakers could introduce differentiated subsidy rates based on a product's price range and technological sophistication.

Jiang Xueqing contributed to this story.

Contact the writers at zhoulanxv@chinadaily.com.cn