Fidelity International reports that China’s economic outlook for 2026 is increasingly balanced and resilient. This assessment comes as policymakers transition from signalling to executing strategies under the nation’s new five-year plan. Peiqian Liu, Asia economist, suggests that China’s economy is well-positioned to meet or even surpass the International Monetary Fund’s (IMF) growth forecast of 4.2 per cent. Market expectations are targeting growth closer to 5 per cent, fuelled by manufacturing, exports, and robust infrastructure development.
Liu noted that despite a complex domestic environment, China’s macroeconomic outlook is improving. The economy is expected to continue its dual-track pattern, characterised by soft domestic demand alongside strong export performance. Fiscal policy is projected to remain supportive, with the budget deficit hovering around 4 per cent. Additionally, the central bank is likely to implement approximately 10 basis points in rate cuts and 50 basis points in reserve requirement ratio (RRR) cuts throughout the year.
Stuart Rumble, Fidelity’s head of investment directing for Asia Pacific, observed that Chinese equities are demonstrating renewed strength. The MSCI China Index experienced a surge of 31.4 per cent in 2025, primarily driven by advancements in technology and artificial intelligence (AI). Rumble stated that liquidity conditions and capital flows remain favourable across both onshore and offshore markets.
While acknowledging potential risks associated with housing, geopolitics, and deflation, Rumble highlighted technology, innovation, and consumption-linked sectors as areas poised for outperformance. These sectors are expected to benefit from ongoing structural reforms and industrial upgrades that are reshaping the Chinese economy. Fidelity International is a global asset manager providing investment solutions and retirement expertise. Fidelity manages investments across various asset classes and geographies, serving individual investors and institutions.
