China Pledges Stronger Policy Support for Growth

China's cabinet, chaired by Premier Li Qiang, vowed to ensure the economy achieves its full-year growth target after second-quarter GDP growth slowed to 4.3%, the weakest pace in more than three years. While resilient exports have helped cushion the slowdown, they have not fully offset persistent domestic weakness, leaving first-half growth at 4.7%, near the lower end of Beijing's 4-1/2%-5.0% annual target. To bolster the recovery, the State Council stressed maximizing the efficient use of fiscal funds and accelerating policy implementation. Investors are now focused on the upcoming Politburo meetings later this month, where authorities are expected to unveil more targeted stimulus measures to boost domestic consumption, support fixed-asset investment, and stabilize economic growth.

China will step up state backing to expand capacity and upgrade quality in the service sector, as it deepens reforms, taps technology, and broadens opening-up to drive growth. The National Development and Reform Commission said Tuesday that Beijing will also sustain support for higher-end manufacturing and efforts to improve living standards. New guidelines aim to grow the service sector to CNY 100 trillion by 2030, focusing on narrowing supply-demand gaps, expanding service provision, and fostering new growth drivers, particularly in services trade. Further, authorities will strengthen producer services through an “AI plus software” push to spur new models and upgrade industrial software. In consumer services, the focus will be on richer cultural and tourism offerings, new consumption scenarios, and tighter regulation to meet rising demand.

China posted a solid start to 2026, with key activity indicators exceeding expectations in the combined January–February period, according to the National Bureau of Statistics. Industrial output and retail sales both grew faster than forecast, highlighting momentum in manufacturing and consumer spending. Fixed-asset investment also surprised on the upside, rising 1.8% against market calls for a 0.4% decline. Meantime, the surveyed jobless rate averaged 5.3%, unchanged from the same period a year earlier, suggesting broadly stable labor market conditions. Despite the upbeat data, the agency cautioned that challenges remain. It warned of intensifying external pressures, elevated geopolitical risks, and persistent domestic structural issues. Some enterprises continue to face operational strains amid the country’s economic transition. The statistics bureau stressed that policymakers must balance sustaining growth momentum with strengthening resilience in an uncertain global environment.