UBS Song Yu: Growth target setting leaves room for flexibility, with greater emphasis on policy coordination and cooperation

WealthCoffee · 2026-03-10T10:52:30+00:00

The 2026 China's economic growth target is 4.5%-5%, aiming for better results. UBS Securities expects economic growth of 4.5%, with increased policy flexibility, maintaining a fiscal deficit rate of 4%, and monetary policy will be moderately easing, emphasizing policy coordination.

WealthCoffee

2026-03-10 10:52:30

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【Caixin】 China’s 2026 economic growth target is set at 4.5%—5%, with efforts to achieve better results in practice. UBS Securities’ Chief China Economist Song Yu explained at a media briefing on March 6 that this target appears to be lowered compared to 2025, but in fact, it leaves room for flexibility. The policy intention is still to strive for a 5% result. Currently, UBS Securities maintains a baseline forecast of 4.5% for 2026 economic growth, but there is potential for an upward revision.

The “Government Work Report” (hereinafter referred to as “the Report”) clearly states that the fiscal deficit rate in 2026 will remain around 4%; the scale of ultra-long-term special bonds and local government special bonds will be the same as in 2025, below market expectations. Song Yu believes that fiscal policy has not shown significant improvement compared to 2025 and still maintains a relatively proactive stance. Regarding monetary policy, he expects the central bank to cut interest rates by 10–20 basis points and reserve requirements by 0.25–0.50 percentage points in 2026, while increasing the use of structural monetary policy tools. At the same time, policy coordination and cooperation are emphasized more prominently.

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