China’s annual policy session, led by Premier Li Qiang, is expected to set a 5% GDP growth target for 2026, accompanied by increased infrastructure spending and targeted fiscal measures. The announcements are poised to influence global commodity markets and risk assets.
- China to set 5% GDP growth target for 2026
- Fiscal deficit to expand to 3.8% of GDP
- 1.5 trillion yuan in special-purpose bonds for infrastructure
- Support measures for property sector and green energy projects
- Potential upward pressure on crude oil (CL=F) and metals (ZC=F) prices
- Expected impact on VIX (^VIX) and Asian equity markets
China’s National People’s Congress is convening its annual session with Premier Li Qiang set to deliver the government work report, outlining 2026 economic targets and policy directions. The central government is expected to formally announce a 5% nominal GDP growth target, a figure consistent with prior years but carrying heightened significance amid persistent domestic demand weakness and deflationary pressures. To support the target, the fiscal deficit is projected to widen to 3.8% of GDP, up from 3.6% in 2025, with a planned issuance of 1.5 trillion yuan in special-purpose bonds directed toward urban renewal and green infrastructure projects. The policy package is also expected to include targeted support for property developers, with new guidelines on refinancing and debt restructuring for qualified enterprises. This follows a recent wave of municipal bond issuances and liquidity injections, signaling a shift toward risk mitigation in the real estate sector. Additionally, the government is likely to reinforce its commitment to technological self-reliance, with increased R&D funding and subsidies for semiconductor and electric vehicle manufacturers. Market reactions are anticipated across global commodity and equity markets. Crude oil futures (CL=F) may see upward pressure if infrastructure and transport investments gain momentum, while non-ferrous metal prices (ZC=F) could benefit from renewed construction demand. The VIX index (^VIX) is expected to decline if the policy framework is perceived as credible and sufficiently stimulative, reflecting improved risk appetite. Asian equities, particularly in China and Southeast Asia, may rally on the back of stronger-than-expected fiscal commitments. The outcome of the meeting will be closely watched by investors and central banks worldwide, especially given China’s role as the world’s second-largest economy and a key driver of global commodity demand. The credibility of implementation remains a key question, particularly in light of past delays in fiscal rollout and uneven regional execution.