- China’s surprising strength in exports and its commitment to more advanced manufacturing in a new Five-Year Plan boost are raising expectations for GDP growth.
- Goldman Sachs Research sees 5-6% annual growth in China’s exports and raised its real GDP forecasts for 2026 and 2027 to well above consensus.
- The approval of the new Five-Year Plan proposal highlights the government’s determination and capability to keep advancing its manufacturing and boost its export market share.
- A meeting between Donald Trump and Xi Jinping in South Korea, signaling a truce on trade, has also improved the growth outlook, even while showing China’s leverage over rare earth minerals to push back on trade restrictions.
- The drag on economic growth caused by China’s property downturn is beginning to ebb, although there is a long way to go to work through excess housing inventory.
China’s economy is likely to grow more quickly than previously forecast, helped by the government’s determination to advance the competitiveness of manufacturing and boost exports, Goldman Sachs Research finds.
China’s real export growth is now expected to grow by 5-6% annually for the next few years, up from a previous forecast of 2-3%, as Chinese goods gain global market share, Goldman Sachs Research economists Andrew Tilton and Hui Shan write in the team’s report.
The team nudged its forecast for China’s 2025 real GDP growth from 4.9% to 5.0%, and with even bigger increases for forecasts for the next two years, on the view that stronger exports will drive overall economic expansion. Goldman Sachs Research increased its real GDP forecast for 2026 from 4.3% to 4.8% and for 2027 from 4.0% to 4.7%. This puts our economists’ Chinese growth forecasts for 2026 and 2027 well above the consensus estimate as tracked by Bloomberg, and above forecasts from the International Monetary Fund.
Export growth has been surprisingly strong in 2025, the researchers explain. This has occurred despite US tariffs that jumped to more than 100% in April before dropping to 30% in May. Chinese real exports are on track for about 8% full-year growth, demonstrating the competitiveness of Chinese products across a wide range of industries relative to global peers.
How have tariffs impacted China’s economy?
It’s not that Chinese exports are immune to tariff impacts, Shan explains in a Goldman Sachs Exchanges podcast. “In categories like toys, footwear, garments, where it’s labor intensive and margins are relatively thin, when you add tariffs you do see large declines” in exports to the US, she explains.
But higher-tech exports are increasing steadily and have for several years. “Chinese exports of chips, semiconductors, autos, auto parts—they are growing steadily despite the fact that the US has imposed tariffs,” Shan says. “So that trend is carrying us toward this very resilient export-driven growth we are observing.”
China’s growth will likely come at the expense of other high-tech producers such as Europe and Japan, the report points out. In other words, it may not generate net-positive growth spillovers elsewhere. A previous analysis by the team has shown that for 1 percentage point of export-driven boost to Chinese GDP, other economies may see a 0.1 to 0.3 percentage point drag, with high-tech producers like Europe and Japan facing particularly acute pressures.
Instead of crowding out labor-intensive, low-value-added manufacturing, as happened in the past, “China Shock 2.0” may crowd out tech-intensive, high-value-added manufacturing, Tilton and Shan write. This will result in a continued disinflationary impulse from cheaper Chinese products, although these products will shift from toys and shoes to cars and semiconductors.
Is China’s high-tech manufacturing growing?
The case for continued strength in China’s manufacturing and exports got a boost from two developments in late October: approval of a new Five-Year Plan proposal for China, and President Trump and President Xi’s agreement on tariffs.
The plenum of the Chinese Communist Party Central Committee approved the proposal for a new Five-Year Plan, the country’s 15th, covering 2026 to 2030. The plan calls for upgrades to traditional industries such as metals, chemicals, and textiles, and growth in emerging industries such as new energy. These goals will get broad-based support from all levels of government, from logistics to financing, helping exports to grow, the researchers find.
A final version of the Five-Year Plan, with economic targets, budgets, and other details, is likely to be approved by the National People’s Congress in March.
Is the US-China trade war still ongoing?
Shortly after the plenum and approval of the Five-Year Plan, President Trump and President Xi met in South Korea on Oct. 30. They emerged with a truce on trade, according to news reports.
The researchers note that not all aspects of the deal have been confirmed by both sides, but China’s use of restrictions on rare earth minerals appears to have dissuaded the US from imposing large tariffs of 100% or more. The meeting appears also to have yielded an agreement for the US to reduce other tariffs by 10 percentage points and loosen some export controls, while China agreed to a one-year postponement of rare-earth export controls and promises to purchase US soybeans.
China’s control over rare earths and other critical minerals has been an effective negotiating tool, and it will likely limit the ability of other countries to impose significant trade barriers against China in the future, the report finds.
“For the first time, China is positioned more as an equal,” Shan says on the podcast. “China has leverage that it can use to force the other side to postpone and pause these restrictions and tariffs,” she notes. “This is a very important signal to the market.”
What is the outlook for domestic consumption in China?
The plenum, where the Five-Year Plan was approved, reiterated the Chinese leadership’s goal of seeing per capita GDP reach that of a moderately developed country by 2035. This implies a real annual GDP growth rate of about 4.5% for 2026 to 2030, and the researchers suggest that the government’s stated growth goal is likely to remain around 5%.
Other encouraging news out of the plenum, Shan adds, were signals that the government will strive to raise the consumption rate—reducing the household savings rate—over the next five years. “They want to promote income growth along with economic growth,” she says.
“However, our takeaway is still that the top priority is to double down on the industrial system, on the technology self-reliance, and on becoming even more competitive in manufacturing and to outcompete global peers, gaining global market share,” she concludes.
Economic policies aligned with the objectives in the Five-Year Plan will probably lead the government to ease interest rates over the coming year. Our researchers are maintaining their forecast for monetary easing, with one 10-basis-point cut in the first quarter next year and another in the third quarter of next year, accompanied by fiscal expansion and credit growth acceleration.
Has China’s housing slump ended?
Among other important influences on China’s growth outlook, the property downturn will enter its fifth year in 2026 after the market peak in 2021. While there is still a long way to go before housing inventories are back in balance, our researchers conclude that the drag on growth will shrink.
New housing starts are 75% below the peak, and property investment is 50% lower, which means real estate’s share of GDP has fallen significantly. Even if the rate of decline remains the same, the impact of the property market’s downturn on the economy should become smaller in the next few years, the report concludes.
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