Demand trails supply: China Outlook

Research evidence excerpt

Demand trails supply: China Outlook

Barclays | China Outlook

• First, China’s exports have consistently exceeded market expectations year to date, partially

offsetting weakened domestic demand. We expect export growth to remain in double-digits

in H2 in view of strong export orders on hand among high-tech exporters (green-tech and AI-

related), lending support to GDP growth.

• Second, the positive effects of previously announced policies are still unfolding. In particular,

the CNY800bn new financing tool had not yet been deployed as of H1. We expect

disbursements to commence in H2, providing incremental support to growth. The CNY800bn

new financing tool reportedly will be channelled towards sectors similar to those in 2025,

including digital economy, AI, low-altitude economy, infrastructure and green transition, with

a heavier focus on services1 .

• Third, we see scope for the authorities to introduce additional (quasi-)fiscal stimulus to

support domestic demand and hit growth target. As 2026 marks the first year of the 15th Five-

Year Plan, policymakers likely retain flexibility to bring forward infrastructure projects and

step up support if 2026 GDP growth is at risk of missing March NPC's target of 4.5-5%.

Watch late July and October Politburo meetings

From a timing perspective, we expect the government to have a clearer assessment of whether

China is at risk of missing its growth target by 19 October, when Q3 GDP data are released. This

will likely inform the decision on whether to step up additional stimulus. As a result, the late-

October Politburo meeting (or the NPC Standing Committee meeting around that time) will be a

key event to gauge potential new stimulus, alongside the late-July Politburo meeting. For