SocGen Says A Less Ambitious GDP Target Leaves China With More Room for Rebalancing

12:37 PM EST, 03/05/2026 (MT Newswires) -- There were few surprises at Thursday's National People's Congress (NPC) in China, said Societe Generale.

China's 2026 policy stance marks a shift toward flexibility and sustainability, with a 4.5%-5% gross domestic product target replacing the long-standing "around 5%," in line with the bank's expectations.

This is a welcome shift and signals policymakers' willingness to accept slower growth to avoid debt-driven stimulus and worsening imbalances, while remaining consistent with long-term goals such as doubling GDP per capita by 2035, stated SocGen.

At the same time, policy support remains measured rather than forceful, wrote the bank in a note to clients. Fiscal expansion is modest, consumption support has been scaled back on sustainability concerns, and no fresh measures on housing are mentioned, leaving the consumption recovery gradual.

Instead, policy is tilted slightly toward investment and technology, reinforced by special bonds and quasi-fiscal tools, pointed out SocGen. Despite underwhelming policy support, the bank doesn't see growth risks given healthy export demand and policy put in place.

Early signals from the 15th Five-Year Plan underline that technology and self-sufficiency still come first, backed by a strong push for Artificial Intelligence and digital infrastructure and focused support for bottleneck technologies, added the bank.

In contrast, consumption remains a medium-term ambition with limited new levers, implying structural support, especially for services consumption, but few near-term catalysts for a demand-led rebound. The references to curbing excess competition doesn't offer new catalysts, but SocGen expects policymakers to continue with their current approach, which should support gradual reflation over time.

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