China: Growth outlook stays resilient – Commerzbank

Commerzbank’s Senior Economist Dr. Henry Hao highlights a resilient start to 2026 for China, driven by strong industrial production, exports and infrastructure investment, despite ongoing property sector weakness. High-tech manufacturing and holiday-related services supported activity, while robust external demand reduce immediate stimulus pressure. The bank suggests its current 4.0% GDP forecast for China may be revised higher.

Resilient growth but structural headwinds

"China’s economy delivered a resilient start to 2026, with industrial production and exports surging past expectations. While the property sector remains a structural drag, robust high-tech manufacturing and a holiday-driven services rebound suggest we will likely revise up our 4.0% GDP forecast, even as long-term downward pressures persist."

"The first set of hard data for 2026 reveals an economy finding its footing through a "two-speed" recovery. While domestic demand and real estate remain fragile, a combination of export strength and state-led investment in "New Productive Forces" (NPFs) has provided a stronger-than-expected buffer. At the annual "Two Sessions" meeting, Beijing’s shift toward a more flexible "4.5% to 5.0%" growth target signals a pragmatic pivot toward quality over sheer volume."

"High-frequency indicator, including the Yicai High-Frequency Economic Activity Index, shows a post-holiday economic activity uptick, driven by rising housing sales and subway traffic. This real-time resilience suggests our current 4.0% GDP growth forecast is relatively conservative."

"However, the escalating conflict in the Middle East poses a dual threat. PBoC Governor Pan Gongsheng has already warned of heightened currency volatility. Prolonged instability could trigger energy price shocks and disrupt Red Sea shipping routes, raising costs for Chinese exporters."

"While the NPF industries remain competitive, these external risks, combined with a deep-seated property drag, reinforce the long-term downward trend in China's potential growth."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)