IMF Holds China 2026 Growth Outlook, Flags Property Risks

The People's Bank of China pledged to roll out “practical and effective” policy support promptly, while avoiding signals of major easing. In its quarterly monetary policy report released Wednesday, the central bank said it will intensify countercyclical adjustments, boost domestic demand, and channel more resources toward technological innovation and smaller firms. It vowed to conduct overnight reverse repo operations more frequently to fine-tune short-term rates, and urged that loans and bond financing be assessed together rather than focusing solely on credit growth. The PBoC noted that capital-heavy sectors like real estate and infrastructure have cooled, while emerging “new productive forces” are more asset-light, reducing traditional loan demand. It also stressed that global monetary recalibration is not a “drastic U-turn,” warning that history shows rapid tightening after massive easing tends to deliver sharper shocks to markets.

The People’s Bank of China (PBoC) said in a statement on Sunday that it will continue monetary support in the second half of 2026, pledging to maintain ample liquidity and adjust policy tools as needed. The statement followed a work meeting led by Governor Pan Gongsheng and echoed last week’s Politburo call to accelerate infrastructure spending. The central bank also vowed to “steadily promote the high-level opening of the financial market,” advancing cooperation on financial infrastructure, expanding liquidity management and risk-hedging tools, and facilitating yuan-denominated panda bond issuance by overseas institutions. It also highlighted plans to strengthen Shanghai’s role in cross-border finance and offshore services, consolidate Hong Kong’s position as a global offshore yuan hub, and support the resolution of debt risks at local government financing vehicles while promoting their market-oriented transformation.

China’s Politburo on Thursday signaled it will continue leaning on existing policy tools rather than rolling out sweeping stimulus, stressing the need to “fully use” current measures. While no major easing appears imminent, leaders pledged stronger countercyclical adjustments and “pragmatic, effective” steps when appropriate, without offering a timetable. Fiscal spending and bond proceeds will be accelerated to spur demand and optimize supply, alongside support for breakthroughs in advanced technologies, future industries, and emerging sectors. The leadership also reiterated commitments to stabilize property, safeguard jobs, tackle local debt risks, reform smaller banks, and deepen capital-market changes. The cautious stance was widely expected after Beijing trimmed its 2026 growth target to 4.5%–5%, even as Q2 delivered the weakest quarterly expansion in more than three years.