GDP target 'reasonable' in key phase

China can reasonably target nominal GDP growth of around 5 percent during the 15th Five-Year Plan (2026-30) period, a pace that would support its 2035 goal of reaching the per capita GDP level of moderately developed economies, according to a renowned economist.

"Aiming for such a target will require a shift toward higher-quality growth, stronger domestic demand and renewed confidence among private businesses," said Betty Wang, head of Northeast Asia Research at British think tank Oxford Economics.

Wang said in an exclusive interview with China Daily recently that the next five years will be a critical transition phase for China as external pressures rise and structural challenges at home intensify, making it harder to rely on the growth model that dominated past decades.

She identified a lack of effective demand as the core constraint on China's economic recovery.

Data from the National Bureau of Statistics show that China's fixed-asset investment decreased by 3.8 percent year-on-year in 2025, while in the first 11 months, it declined by 2.6 percent. And retail sales, a key metric of consumer spending, increased by 0.9 percent in December versus the 1.3 percent growth recorded a month earlier.

On the investment side, Wang said the prolonged downturn in the property sector has significantly weighed on private investment and household spending. At the same time, infrastructure investments led by local governments and State-owned enterprises have lost momentum in recent months, leaving overall investment growth subdued.

Consumption has also remained under pressure, despite a range of policy measures introduced to stabilize demand. These include consumption vouchers and trade-in programs, which Wang described as positive but largely short-term in nature.

Looking ahead, Wang said China's policy focus should move away from rigid growth targets toward improving the quality of expansion. Key areas to watch for include policies aimed at raising the share of consumption in GDP and strengthening support for private enterprises as engines of innovation, employment and growth.

"Over the next five years, the most important goal will be a successful transition from a property-and investment-led model toward one driven by consumption, services and a revitalized private sector — supported by effective markets and better governance — which would leave room for further upside in China's growth potential," Wang said.

She expects China to maintain a relatively accommodative mix of fiscal and monetary policies, noting that the official fiscal deficit ratio was raised to around 4 percent in 2025 and that this stance is likely to continue through 2026.

On the fiscal front, Wang noted that part of last year's budget has already been directed toward boosting consumption, but there is scope for stronger support from the central government. And monetary policy still has room to ease further, with the possibility of additional interest rate cuts in the near term, she added.

Meanwhile, she emphasized that restoring confidence in the private sector is critical to reviving demand, particularly household consumption.

According to Wang, weak consumer spending is closely tied to concerns over job security and future income growth. As private firms contribute more than 60 percent of GDP and 80 percent of urban employment, stronger policy backing for private enterprises would help stabilize employment expectations and household income prospects.

She also highlighted the importance of longer-term structural reforms, including continued fiscal support for low-income groups, social security reform and the development of a more affordable and sustainable housing model following the property sector's deep adjustment.

Despite current challenges, Wang said China's consumption potential should not be underestimated. "China has increasingly shifted from being primarily a supply-side player in global value chains to becoming a major source of demand, particularly in electronics and high-tech products, where it now drives regional export growth more than the United States."

Wang's views were echoed by Robert Koopman, former chief economist of the World Trade Organization, who noted that "over the next five to 10 years, an important shift in China's role is likely to be toward becoming a major center of demand".

ouyangshijia@chinadaily.com.cn