China set to reaffirm supportive economic strategy at October Politburo
At its September meeting, the Politburo scheduled the Fourth Plenary Session of the 20th CPC Central Committee for October, focusing on key issues related to the 15th Five-Year Plan. We expect the upcoming session to reaffirm China’s economic strategy set out earlier in the year. Fiscal policy will remain expansionary, with the deficit projected to widen to -4.4% from -3% in 2024 (exceeding our previous expectation of -4.0%). Measures to address local government debt and stabilise the property sector will continue, supporting the housing destocking process, while consumption stimulus is likely to strengthen moderately in 2026. Overall, GDP growth is expected to meet the government’s target this year. Given this outlook, we maintain a slightly constructive strategic stance: while policy remains supportive and confidence-building efforts continue, underlying economic momentum still lacks clear signs of meaningful acceleration, suggesting a steady but unspectacular recovery trajectory for the Chinese economy in 2025-2026.
VALERIO CEOLONI
Senior EM/FX Strategist
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