Introduction to China’s Economic Plan
China recently held the Central Economic Work Conference, which outlined major arrangements for the country’s economic work in 2026. As the first year of the 15th Five-Year Plan (2026-2030), 2026 is particularly significant. The conference translated the broad strategic vision into concrete and actionable tasks, shifting from a general approach to meticulous detail.
Aligning with the 15th Five-Year Plan
The conference aligns closely with the Recommendations of the Central Committee of the Communist Party of China for Formulating the 15th Five-Year Plan for National Economic and Social Development. This plan identifies major-country relations as a key factor shaping the international landscape and acknowledges that changes in the global situation will profoundly impact domestic development. China’s development will face both strategic opportunities and risks, with rising uncertainty and unpredictability.
Addressing External Shocks
In response to the adverse external environment, the Chinese government made timely assessments and contingency plans. The prevention and mitigation of external shocks were listed as an overarching requirement for last year’s economic and government work. The latest Central Economic Work Conference explicitly called for "better coordination of domestic economic work with international economic and trade struggles," reflecting the authorities’ judgment that international economic and trade frictions are long-term in nature.
Economic Resilience and Growth
Despite external pressure, China’s economy demonstrated strong resilience in the first half of the year, exceeding expectations. Bilateral tariff tensions eased markedly, and the July Political Bureau meeting removed the call for "coordinating domestic economic work with international economic and trade struggles." However, the latest conference retained this wording, adding the word "better" to reflect China’s more proactive and confident posture in addressing international economic and trade frictions.
Macro Policy Orientation
The conference continued the policy stance set at the end of 2024, reiterating the need to "implement more proactive and effective macro policies." It stressed the continuation of a more proactive fiscal policy and a moderately accommodative monetary policy, maintaining the emphasis on stabilizing employment, businesses, markets, and expectations. Notable adjustments were made to the wording on macro policy orientation, replacing "effectiveness" with "coordination" and adding references to "cross-cyclical" regulations.
Fiscal and Monetary Policy
Regarding fiscal policy, the conference replaced the previous year’s wording with a call to "maintain necessary levels of fiscal deficit, total debt, and overall spending." The budget deficit ratio is expected to remain at around 4 percent, while newly added government debt may exceed last year’s level. For monetary policy, the conference emphasized making stable economic growth and a reasonable rebound in prices important considerations, flexibly and effectively using tools such as reserve requirement ratio cuts and interest rate reductions.
Maintaining a Stable Exchange Rate
The conference emphasized maintaining the renminbi exchange rate at a "basically stable, reasonable, and balanced level," underscoring that preventing excessive exchange-rate fluctuations remains a top priority. Expanding domestic demand remains the top task for economic work this year, with the conference calling for "upholding domestic demand as the main driver and building a strong domestic market."
Innovation-Driven Development
The 15th Five-Year Plan proposal identifies a substantial increase in the level of self-reliance in science and technology as one of seven major goals. The conference made arrangements covering education, science, and talent development, international innovation hubs, the role of enterprises as innovation leaders, and artificial intelligence. Compared to the previous year, the conference moved the task of defusing risks in key areas to a later position, reflecting phased progress in risk mitigation.
Conclusion
In conclusion, the Central Economic Work Conference mapped out the main thread of economic policy for 2026, marking the start of the 15th Five-Year Plan. Going forward, all parties are expected to maintain a pragmatic and proactive approach, address concrete challenges, enhance the sense of gain among market entities, strengthen coordination between reform and policy, and promote sustained improvement in economic performance and market expectations. This will ensure a solid and successful start to the 15th Five-Year Plan, driving China’s economic growth and development in the years to come.
