China may aim for above-consensus growth during 2026-30, counting on TFP gains from tech progress. More spending is likely to be devoted to population’s wellbeing to release consumption potential. Authorities likely to adopt more proactive approach to broaden use of RMB in international transactions, Standard Chartered's economists Shuang Ding and Hunter Chan report.

Playing the long game

"China’s 15th Five-Year Plan (FYP) is likely to underscore the importance of growth. The Central Committee of the Chinese Communist Party (CCP) will hold its 4th Plenum from 20-23 October, and a proposal on the next FYP will be released thereafter. While we do not expect specific growth targets to be disclosed, recent deliberations in policy-making circles indicate that average growth of 4.7-4.8% is desired for 2026-30, to pave way for a doubling of 2020 GDP by 2035. We estimate that China’s potential growth could average 4.3% in the next five years; market consensus forecasts are lower than our estimate. We expect macro policies to remain accommodative in light of the growth ambition."

"Innovation will likely be prioritised to boost total factor productivity (TFP) amid an aging population and technology restrictions from the West. More incentives are likely to be introduced to encourage private sector spending on R&D, leveraging China’s STEM talent pool. China may continue to invest to consolidate its lead in renewable energy, with the aim of achieving peak carbon emission by 2030.  To address the risk of overcapacity, the FYP may elaborate measures to foster domestic demand, including by redistributing income and social benefits in favour of the low-income segment and liberalising the services sector."

"The authorities may see the next five years as a good window to promote the use of Renminbi (RMB) in international trade and investment and making RMB assets more investible. We also expect China to explore alternative channels for cross-border payment, supported by Hong Kong as the key offshore financial centre."