Goldman Sachs expects China's real GDP to grow 4.7% in 2026, with tech exports and policy support offsetting drags from property and consumption

Overview

This Goldman Sachs China economic outlook report focuses on China's macro growth, inflation, policy, exports, property, and RMB trends in 2026. The core view is that China's real GDP can still achieve 4.7% growth, in line with the government's target, but the growth structure will remain divergent: technology, manufacturing, and export-related sectors are relatively strong, while property and household consumption remain the main drags.

Core views

Goldman Sachs believes that China's economic growth in 2026 will be supported by a modest improvement in domestic demand, faster government consumption, resilient tech product exports, and fiscal expansion. Property has not yet bottomed, but the degree of drag may decline; the current account surplus is expected to remain at a high level; reflation will be driven by energy prices and anti-involution policy; monetary policy rates will likely remain unchanged, and the RMB is expected to gradually appreciate against the U.S. dollar.

Analysis framework

The report combines comparisons between global GDP forecasts and consensus estimates, China's annual macro forecast tables, export product structure breakdowns, property inventory and price indicators, augmented fiscal deficit indicators, credit structure, and analysis of the RMB and current account to produce a top-down forecast for China's 2026 macro path.

Methodology notes

• Macro ForecastingGS China Forecasts

  Supply-Demand Decomposition Forecast

  Using indicators such as GDP, domestic demand, consumption, gross fixed capital formation, net exports, inflation, current account, exchange rates, interest rates, and fiscal deficits, the report constructs a baseline macro scenario for China in 2026.

• External Demand and Industrial StructureTech vs Non-tech Exports Decomposition

  Tech Product Export Decomposition

  The report uses HS 84 and HS 85 as proxy variables for tech products to compare trends in tech and non-tech exports, highlighting the rising contribution of tech products to export growth.

• Fiscal PolicyAugmented Fiscal Deficit

  Augmented Fiscal Deficit

  The report uses the augmented fiscal deficit to measure the degree of policy support and expects this indicator to widen by 1.0 percentage point to 12.0% of GDP in 2026.

• Property CycleInventory Months and Z-score Framework

  Inventory Months and Historical Percentile Comparison

  The report uses inventory months and Z-scores to measure property inventory pressure and compares the stabilization experience of tier-one cities in mainland China with that of Hong Kong real estate.

• Shock AnalysisLocal Projections with Instrument Variable

  Assessment of Energy Supply Shock Impact

  The report cites monthly data from 2006-2025 and uses the oil supply shock from Kanzig (2021) as an instrumental variable to assess the impact of energy price shocks on the economy and inflation.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• China Macroeconomy

  Direct coverage

  Strengths

  Real GDP is expected to grow 4.7% in 2026, supported by policy backstops, government consumption, and tech exports.

  Weaknesses

  Household consumption remains weak, the property market has not bottomed, and the recovery in domestic demand remains uneven.

  Comparison

  China's 2026 growth is higher than that of major developed economies and also above Goldman Sachs' global forecast of 2.4%.

  Risks

  Energy supply shocks, a worse-than-expected property downturn, slower external demand, and weaker-than-expected policy execution.

• RMB and USDCNY

  Macro forecast variable

  Strengths

  The current account surplus remains high, and the report expects the RMB to gradually appreciate against the U.S. dollar.

  Weaknesses

  The exchange rate is still influenced by the U.S. dollar cycle, capital flows, and external risk appetite.

  Comparison

  The report projects a path of USDCNY at 6.50 in 12 months and 6.70 by end-2026.

  Risks

  Renewed U.S. dollar strength, trade frictions, or geopolitical shocks could weaken the appreciation path.

• China Tech and Manufacturing Exports

  Growth support item

  Strengths

  Exports are increasingly driven by tech products, and China still retains advantages in the global manufacturing supply chain.

  Weaknesses

  Price effects have been more pronounced recently, and part of export growth may be affected by prices and external demand volatility.

  Comparison

  The report compares tech exports separately from non-tech exports, emphasizing the stronger performance of tech products.

  Risks

  Slower overseas demand, escalating trade restrictions, and intensifying price competition.

• China Real Estate

  Macro drag item

  Strengths

  Its drag on GDP growth is expected to decline, and Shenzhen and Shanghai may lead stabilization.

  Weaknesses

  The property market has not yet bottomed, inventory pressure remains high, and household balance sheets are still deleveraging.

  Comparison

  The report references the stabilization experience of Hong Kong's property market and compares inventory conditions across tier-one cities.

  Risks

  Continued price declines, slower-than-expected inventory digestion, and insufficient homebuyer confidence.

• China Interest Rates and Fiscal Policy

  Policy assumption

  Strengths

  The augmented fiscal deficit is expected to widen to 12.0% of GDP, and government consumption growth is set to increase.

  Weaknesses

  Monetary policy rates are expected to remain unchanged, leaving limited room for further easing.

  Comparison

  Fiscal support is 1.0 percentage point larger than in 2025.

  Risks

  A slow fiscal implementation pace, insufficient incentives for local officials, or a policy multiplier lower than expected.

Key data

• China real GDP growth in 20264.7%Goldman Sachs forecast, in line with the government's 4.5%-5% target range; the consensus forecast is 4.6%.
• China real GDP growth in 20274.7%Goldman Sachs forecast is above the consensus forecast of 4.4%.
• Domestic demand contribution in 20263.7 percentage pointsHigher than 3.4 percentage points in 2025.
• Consumption growth in 20264.8%Including 4.5% household consumption and 5.5% government consumption.
• Gross fixed capital formation growth in 20262.5%An improvement from 1.5% in 2025.
• Net export contribution in 20261.0 percentage pointBelow 1.6 percentage points in 2025, but still a positive contribution.
• Nominal USD export growth in 202610.5%Tech product exports are viewed by the report as an important support.
• CPI and core CPI in 2026both at 1.0%Goldman Sachs expects CPI to rebound from 0% in 2025.
• PPI in 20262.0%Expected to turn positive from -2.6% in 2025, driven by energy prices and the anti-involution policy.
• Current account balance in 20263.4% of GDPThe report expects it to continue rising in 2027 and 2028.
• USDCNY6.50 in 12 months; 6.70 by end-2026The report expects the RMB to gradually appreciate against the U.S. dollar.
• OMO 7-day reverse repo rate1.40%End-2026 forecast; the report expects policy rates to remain unchanged.
• Total social financing outstanding growth in 20267.6%Below 8.3% in 2025.
• Augmented fiscal deficit in 202612.0% of GDPWidening by 1.0 percentage point from 2025.

Impact & implications

The report's implications for China assets are more structural than broadly optimistic: macro growth targets are achievable, and the RMB and the tech manufacturing chain have supportive factors, but property, household consumption, and policy execution still limit overall demand elasticity. In investment terms, tech exports, manufacturing upgrades, and RMB-related assets are better positioned to benefit; assets tied to the property chain and household consumption still need to wait for signals of fundamental improvement.

Risks

• Energy supply shocks triggered by Middle East conflict could raise costs and disrupt growth.
• The property market has not yet bottomed, and inventory and price pressures may continue to weigh on household confidence and investment.
• Household consumption may remain weak, with high household deposits reflecting insufficient risk appetite.
• Although tech exports are strong, external demand, trade restrictions, and price competition may weaken their sustainability.
• Policy effectiveness depends on fiscal implementation, local incentives, and the actual strength of anti-involution measures.
• If inflation rebounds mainly due to cost-push factors rather than improving demand, corporate profits and consumption capacity may come under pressure.

What to watch

• How the seasonally adjusted quarter-on-quarter real GDP growth in Q2 and Q3 2026 materializes.
• The sustainability of tech product exports relative to non-tech product exports, and whether price effects expand.
• Property prices, inventory months, and transaction volumes in tier-one cities, especially whether Shenzhen and Shanghai stabilize first.
• The actual rollout pace of government consumption, service consumption support policies, and the augmented fiscal deficit.
• The magnitude of PPI turning from negative to positive, and how effectively the anti-involution policy restrains price competition.
• Whether improvements in USDCNY, the current account surplus, and the international use of the RMB continue.
• Structural changes among total social financing growth, corporate loans, and property-related credit.