Minmetals Securities Yang Chengxiao: Maintaining Growth Resilience Amid Structural Adjustment and Risk Mitigation

On March 5th, Premier Li Qiang delivered the Government Work Report, clearly outlining the main expected goals and key tasks for China’s economic and social development by 2026.

Yang Chengxiao, Deputy General Manager and Director of the Research Institute at Minmetals Securities, believes that the economic growth rate range set in this year’s government work report carries profound policy implications: First, it opens space for future reforms by pre-setting growth expectations, strengthening communication with the market to ensure confidence remains unaffected by reforms. Second, it is more pragmatic, emphasizing the synchronization of residents’ income and economic growth, aiming to not only “make the cake bigger” but also to “divide the cake well,” which is a necessary foundation for achieving domestic demand goals. Third, the report emphasizes “striving for better results in practical work,” indicating that the range target does not mean satisfaction at 4.5%, but that the true acceptable goal may lean toward the upper end of the range, reflecting a more proactive attitude.

The logic of fiscal policy is not simply to expand spending but to enhance the structure of expenditures based on total volume support, focusing on “domestic demand recovery and expectation stabilization,” and reducing inefficient use of funds and risk recurrence through stricter budget constraints and discipline. In a weak expectation environment, monetary policy constraints are often less about “whether total volume tools can be used” and more about “whether credit can effectively generate demand.” Therefore, the report’s emphasis on transmission mechanisms and structural support indicates that policies prioritize “funds entering the real economy, key sectors, and forming sustainable cash flows,” rather than just nominal reductions in financing costs. Incorporating a reasonable price level recovery into monetary policy also signifies that macroeconomic governance is increasingly focused on “the role of nominal variable restoration in supporting expectations and profits,” to promote a healthy economic cycle.

Regarding specific tasks, the first item, which in 2025 was summarized as “vigorously boosting consumption, improving investment efficiency, and comprehensively expanding domestic demand,” has been refined into 2026 as “focusing on building a strong domestic market.” This upgrade from a tool-based to a strategic statement emphasizes that domestic demand should not only be driven by policies but also strengthened through market systems, rule environments, and expectation restoration to “enhance the cycle.” The second and third items, originally “developing new quality productivity / promoting science and education for national rejuvenation,” have shifted to “cultivating new drivers / achieving technological independence and self-reliance,” highlighting the urgency of implementing new drivers and tackling key core technologies. The reform and opening-up initiatives continue overall, but 2026 places greater emphasis on “deepening key sector reforms” and “further expanding high-level opening-up,” shifting policy focus from “implementation of measures” to “institutional continuity and rule-based opening.” Additionally, 2026 emphasizes embedding “investment in people,” “public services,” and “income expectation restoration” into the main theme of strong domestic demand, completing the growth logic and institutional supply in the first half of “strengthening the market, dynamic energy, and institutions,” followed by long-term constraints and bottom-line guarantees through “green transformation + risk and security.”

Compared to 2025, the adjustments in the ten key tasks for 2026 more clearly reflect a policy mainline shift from “a toolkit for expanding domestic demand” to “a strategic drive for a strong domestic market,” while simultaneously reinforcing “new drivers + technological independence” as growth supports. Reform and opening-up emphasize institutional continuity and rule-based openness more prominently. The overall sequencing also leans toward “solidifying growth cycles and momentum first, then using risk and security as a safety net,” indicating that the first year of the 14th Five-Year Plan is shifting from reactive stabilization to systematic restructuring and re-anchoring expectations.