China has set its 2026 economic growth target at 4.5%, the lowest since 1991, reflecting ongoing structural challenges and weak domestic demand. The move has triggered global market volatility, with oil and industrial metal prices reacting to diminished commodity demand expectations.
- China's 2026 growth target is 4.5%, the lowest since 1991
- Industrial output growth below 4%, property investment down 8.2%
- Crude oil (CL=F) fell 2.1%, copper declined 1.8% on demand concerns
- Gold (GC=F) rose 1.3% amid risk-off sentiment
- VIX index increased 12% on heightened market volatility
- Global supply chains and commodity exporters face revised demand outlooks
China's National People's Congress has formally approved a 2026 economic growth target of 4.5%, marking the slowest official target since 1991. The figure underscores continued headwinds from property sector distress, declining consumer confidence, and weak export performance, despite government stimulus measures. This marked downward revision signals a shift from high-speed growth to a focus on stability and quality over quantity. The 4.5% target reflects a more cautious outlook compared to the 5.0% growth achieved in 2024 and 5.2% in 2023. Analysts note that underlying indicators—such as industrial output growth below 4% and retail sales increasing at a 3.1% year-on-year pace—support the conservative benchmark. With fixed asset investment rising only 3.7% and property investment still contracting by 8.2%, the economy remains heavily reliant on policy support, including targeted infrastructure spending and monetary easing. Commodity markets reacted sharply to the news, with crude oil futures (CL=F) dropping 2.1% and industrial metals like copper (LME copper) declining 1.8% on concerns over reduced Chinese demand. Gold (GC=F) gained 1.3% as investors sought safe-haven assets amid heightened risk-off sentiment. The VIX index rose 12% in early trading, signaling increased market turbulence, particularly in equities linked to global supply chains and Chinese manufacturing. The shift in China’s growth trajectory has broad implications for global trade, especially for commodity-exporting nations in Latin America, Africa, and Southeast Asia. Major exporters of iron ore, coal, and nickel—key inputs for China’s steel and electric vehicle industries—are facing revised demand forecasts. Multinational corporations with significant operations in China are reassessing capital allocation and inventory strategies in anticipation of prolonged low-growth conditions.