Deloitte expects China's growth to moderate to around 4.5% in 2026

The contribution of net exports to gross domestic product (GDP) is expected to decline next year and the property market downturn is likely to continue working through the system over the next 12 months.

This year proved far better for the Chinese economy than most had expected, it said in a note. The growth target of ‘around 5 per cent’ was achieved without heavy reliance on fiscal stimulus or monetary easing.

However, the country’s economy remains imbalanced in its growth drivers. Domestic demand is still subdued, weighed down by a struggling property sector and a soft labour market, Deloitte noted.

China’s economic rebalancing hinges on raising the consumption-to-GDP ratio, a goal explicitly endorsed at October’s Fourth Plenary Session.

The external environment will further shape policy implementation. Even if the US-China trade truce holds, resistance to Chinese exports is likely to intensify on multiple fronts, it noted.

With Mexico imposing 50-per cent tariffs on Chinese goods, similar retaliatory measures may arise elsewhere. Countries with persistent trade deficits with China, including India and Turkey, may impose additional barriers. Even economies that rely heavily on Chinese investment, like Brazil and Thailand, could adopt sector-specific tariffs, particularly on steel, Deloitte observed in a note.

Such backlash may also be fueled by China’s expanding trade surplus. Options for countering protectionism appear limited, given existing imbalances with Europe and Mexico.

While voluntary export restraints—reminiscent of Japan’s experience decades ago—are sometimes cited, the broader point remains that exports are likely to face stronger headwinds in 2026, it added.

ALCHEMPro News Desk (DS)