China's economy slows down and falls below 5%

Crédito y Caución has produced a report on the economic growth prospects for the main global markets in 2026 and 2027. In the case of China, its economy is expected to slow down as export momentum fades and structural challenges persist. GDP growth is expected to remain at 4.4% for this year and next, below the levels recorded in 2024 (5%) and 2025 (4.8%).

Several factors explain the loss of momentum in China's economy. On the one hand, private investment in artificial intelligence infrastructure, which is driving growth in other major markets such as the United States, is substantially lower in China, leaving a limited impact on local GDP.

On the other hand, although the trade agreement between the United States and China eased a period of great tension by revoking a series of tariffs and export controls, it still casts a great deal of uncertainty on the international context. The relationship between the two countries continues to be marked by mistrust and rivalry.

In addition, export growth is beginning to lose momentum as a result of the anticipation of purchases that occurred in the first quarter of 2025 to avoid tariffs. However, in October, exports fell by 1.1% year-on-year, while imports rose by 1%, according to customs data. Against this backdrop, export growth is expected to slow throughout 2026. 

On the other hand, consumption growth continues to be held back by high levels of precautionary savings and the correction in the property market, despite rising incomes and increased social spending.

Public investment is much stronger than private investment, as the government is accelerating infrastructure spending, particularly on strategic projects that strengthen China's resilience to natural disasters and geopolitical conflicts. At the same time, deflationary pressures are prompting policymakers to try to revive the economy through public spending and monetary easing, likely through measures such as further cuts in the official interest rate, a lower reserve requirement ratio and the granting of preferential interest rates.

These initiatives, together with the extension and expansion of the exchange programme to include smartphones in addition to household appliances, will mainly benefit low-income groups, which have a higher propensity to consume.

In summary, China's economy will continue to outperform the global average, with growth forecast at 4.4% in 2026, compared to 2.8% globally. However, it will face significant challenges that are slowing its momentum, such as cooling exports.