At the same time, the structural challenges plaguing China\u2019s domestic economy are not going away.\u00a0 China has already forced a major downshift in property leverage, but the sector is still in a multi-year process of balance sheet repair.\u00a0 Even without a banking collapse, property busts can suppress growth for years via weak prices, impaired cashflow, and slow cleanup of bad debts (as seen in Japan in the 1990s and early 2000s).<\/p>\n
Policymakers have vowed to significantly boost the share of household consumption in its economy over the next five years.\u00a0 However, previous pledges and policy initiatives have failed to deliver, and there is no reason to think that current efforts will have greater success.\u00a0 The continued property correction, low consumer confidence, deflationary pressures and an acute demographic profile all work against a sustainable lift in consumption.<\/p>\n
These structural pressures will continue to see overall growth rates (and targets) in China step down over coming years.\u00a0 Beijing has shown it is willing to accept slower economic growth and some pain in parts of the domestic economy, provided its broader strategic objectives are being met.<\/p>\n
The geopolitical landscape remains the major wildcard for the Chinese (and global) economy in 2026.\u00a0 The external strategic environment will continue to become more challenging and hostile to China.\u00a0 The US is aggressively pursuing its interests abroad and pushing back harder on Chinese and Russian influence in third countries -as demonstrated by recent US actions in Venezuela (i.e. the \u2018Donroe Doctrine\u2019).<\/p>\n
Broader western efforts to de risk from China and limit its dominance of strategic sectors (e.g. critical minerals) will accelerate in 2026.\u00a0 And as this pressure grows, and the global rules-based order continues to fray, the risk of conflict in the South China Sea will loom larger.<\/p>\n","protected":false},"excerpt":{"rendered":"At the same time, the structural challenges plaguing China\u2019s domestic economy are not going away.\u00a0 China has already…\n","protected":false},"author":2,"featured_media":238989,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[114,43902,184,85,46,43,107968],"class_list":{"0":"post-238988","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-business","9":"tag-cba-story","10":"tag-economy","11":"tag-il","12":"tag-israel","13":"tag-news","14":"tag-research-and-reports"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/238988","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=238988"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/238988\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/238989"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=238988"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=238988"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=238988"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}