TS Lombard gives us the company view of the new Five Year Plan.
First, consensus expectations for 2026 GDP are too bearish. Xi Jinping has recommitted the CCP to doubling 2020 per capita GDP by 2035 (just as we forecasted!) This entails a growth rate of ~4.6% yoy to reach that goal. While we do not think China will be able to maintain 4.6% growth for a decade, by setting that target the CCP is likely to put GDP objectives at “about 5%” for the next few years. For 2026 we think more fiscal stimulus is coming – 1.5–2ppt of GDP – to push the growth rate up to a politically acceptable 4.8% yoy vs 4.2% yoy consensus.
Second, Beijing is shifting its focus to consumption. Early this year we made the big off-consensus call that China would rebalance its economy towards consumption. We argued that with investment and exports facing constraints, boosting consumption – the sole remaining growth driver – was becoming a political-economic
necessity for Xi Jinping.
