1. China's economic growth is now increasingly driven by high-tech industries, exports, and domestic substitution of foreign technology, but the country faces formidable constraints including a prolonged property slump, weak household demand, and strained local-government finances, economists said at the Asia New Vision Forum 2026 in Singapore, organized by Caixin Global with Singapore government support. [para. 1][para. 2][para. 3]
2. The economy is experiencing an uneven, K-shaped recovery, with high-tech sectors growing steadily while investment and consumption contract, according to Shen Minggao of Zhejiang University. The real-estate sector remains the biggest constraint on growth—at its peak, property and related industries accounted for roughly one-third of China's economic activity, and the downturn has weighed on household wealth, local revenues, and market confidence. China's property market is less financialized than developed economies' markets, which may make the adjustment slower but more gradual and far-reaching. While top-tier cities like Shanghai have stabilized, nationwide the market hasn't reached bottom and won't arrest its decline until deleveraging is complete, according to Wang Dan of Eurasia Group. [para. 4][para. 5][para. 6][para. 7][para. 8][para. 9][para. 10]
3. The ultimate constraint on growth is the central-local government relationship, Wang said—local debt burdens have risen since the pandemic, reducing Beijing's ability to rely on regional authorities for infrastructure and other spending. The investment-led model associated with Hefei is an exception few cities can replicate, and broader fiscal reform is needed. Meanwhile, exports have performed strongly while domestic substitution for foreign technology has become an important growth engine, and despite obstacles from the U.S. and Europe, faster technological upgrades will spur manufacturing investment and likely raise China's share of global manufacturing. [para. 11][para. 12][para. 13][para. 14]
4. The geopolitical environment has shifted significantly—China's rise over four decades was aided by open U.S., European, and Japanese markets, but those countries now view China as a strategic competitor or seek decoupling, creating obstacles amid geopolitical realignment, according to Nanjing University's Zhu Feng. This has renewed attention on rebalancing the economy, a central task for the 15th Five-Year Plan period (2026-2030), which reflects two policy shifts: balancing traditional and high-tech industries via a modern industrial system, and emphasizing domestic demand through consumption-driven growth. Household consumption should gradually become a more significant growth engine, but China must remove bottlenecks preventing growth from translating into household spending. [para. 15][para. 16][para. 17][para. 18][para. 19][para. 20]
5. In the short term, Shen called for more expansionary fiscal policy to ease pressures from the property adjustment, paired with credible medium-term policies to bolster consumer confidence. Existing measures—trade-in subsidies and service-consumption programs—haven't changed market expectations because it's unclear how many resources Beijing will commit to boosting consumption. He urged authorities to set clear five-year targets for consumption, inflation, and other indicators to give households and companies confidence to spend and invest. Zhu added that China is in a relatively long period of adjustment, and the priority should be raising per capita household income to lift consumption and growth. [para. 21][para. 22][para. 23][para. 24][para. 25]
6. The rebalancing debate has implications for the yuan. Shen said the currency has long-term appreciation room, but gains should be supported by a more resilient domestic economy less dependent on exports; authorities would also need to consider whether companies could withstand a stronger yuan. Wang noted demand for asset diversification has grown—particularly since the outbreak of the U.S.-Iran war in 2026—with non-dollar assets gaining a geopolitical premium that benefits yuan assets. Over the long term the yuan will strengthen, but for now officials favor keeping it broadly stable. [para. 26][para. 27][para. 28][para. 29][para. 30]
7. As Chinese companies expand overseas, China must maintain strategic resilience amid a profoundly changed geopolitical and geoeconomic environment, Zhu said. A critical challenge is ensuring commercial security and legal protections for Chinese businesses abroad—a security objective that shouldn't be compromised, even if such efforts generate new geopolitical friction. [para. 31][para. 32][para. 33]
AI generated, for reference only
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