CMF releases Q1 2026 macroeconomic report: the economy will achieve a "good start," with stable operation expected throughout the year

On April 4, the China Macroeconomic Forum (CMF) released its 2026 Q1 macroeconomic analysis and forecast report (hereinafter referred to as the “Report”). The Report believes that my country’s economy in Q1 will deliver a solid start, and that the country is likely to maintain steady operations throughout the year. The Report also proposes that in the “15th Five-Year Plan period” (15th Five-Year Plan and beyond), development should be driven by two engines—modern industrial systems and distribution systems—break through bottlenecks of traditional asset-driven development models, and kick off a new cycle of economic development. Yu Ze, deputy dean of the School of Economics at Renmin University of China and a main member of CMF, represented the research team in releasing the Report.

In Q1, China’s economy will achieve a “strong start to the year”

According to the Report’s judgment, in Q1 2026 my country’s economy is expected to achieve a “strong start to the year,” with the year-on-year growth rate of gross domestic product (GDP) forecast to be more than 5%, and under ideal circumstances could reach 5.3%.

Yu Ze said this favorable start is mainly attributable to strong external demand and a big rebound in infrastructure investment. In January and February, China’s exports valued in RMB recorded a cumulative year-on-year growth rate of 19.2%; exports to emerging markets such as Africa and Latin America became new growth points. The advantages of the full industrial chain and cross-border e-commerce models jointly support the resilience of foreign trade. Broad infrastructure investment grew 11.4% year on year; the pre-advancement of major projects during the “15th Five-Year Plan period” has become the core engine for investment. Meanwhile, consumption is rebounding steadily, showing three major features: deeper penetration into lower-tier markets, a full-line rebound in service consumption, and new impetus from “buying the old for the new” (trade-in and upgrade policies). Industrial production is also rebounding in tandem. New drivers of economic growth continue to expand, and investment in high-tech industries and growth in high-end services are particularly impressive.

Yu Ze believes that, judging purely from the data trajectory, even if oil prices remain around $100 per barrel within the year, combined with the continuation of exports and the upward trend in infrastructure investment growth, the positive trend in Q1 is likely to carry into Q2 and Q3, and the country’s overall economic growth for the year is expected to stay around 4.8%. Overall, China’s economy in 2026 can maintain steady growth.

Unblock bottlenecks and unleash new momentum for development

Yu Ze believes that the current economic operation features new characteristics such as growth rates moving inversely to prices, “strong external demand but weak internal demand,” divergence across industry cycles, and the “pulsing” nature of policy effects. The prominent manifestation of the blockages in the cycle is that on the supply side there is “involution,” that cost-reduction and efficiency gains by microeconomic entities form a contractionary loop, that real estate is undergoing a deep adjustment, and that the traditional mechanism for transmitting aggregate demand is failing, among other problems.

“These bottlenecks are not caused purely by cyclical shocks.” Yu Ze said. Instead, they stem from structural contradictions that have reached their limits under the existing local resource assetization development model. Traditional pathways such as land finance and financing platforms have narrowed in room for expansion, making it difficult to meet the needs arising from upgrading service consumption. This triggers deeper problems such as asset misallocation, impaired factor mobility, and disconnects between supply and demand.

Yu Ze said that the key to breaking the deadlock lies in getting rid of traditional path dependence. By leveraging modern industrial systems and modern distribution systems in a coordinated way, the macro level should shift from assetization-driven growth to industry-upgrade-driven growth, and the micro level should shift from simply making assets bigger to operating assets efficiently, thereby laying the foundation for the new cycle of the “15th Five-Year Plan period.”

Yu Ze recommended that, in line with the need to stabilize growth in the short term and reform in the long term, on the macro policy front, it is necessary to innovate the thinking behind counter-cyclical policies. For example, fiscal policy can implement a phased “balance receipts with expenditures” approach to maintain sufficient strength. Monetary policy should focus on lowering the financing costs of financial institutions; while stabilizing liquidity, it should also reduce the liability costs of financial institutions. In addition, with “post-1960s” and “post-1990s” generations as the main targets, enhance residents’ service consumption. Moreover, it is necessary to unblock the policy transmission mechanism, strengthen policy coordination, and expand policy room.

“Next, real estate policy this year also needs to be further strengthened.” Yu Ze said, adding that he suggests further concentrating policies at the national level. Specific measures include increasing efforts at national-level stockpiling and storage (to reduce risks), and increasing central government fiscal support to promote urban renewal, among others.

On the reform front, efforts should accelerate the development of a high-level socialist market economy system. Taking improvements in the business environment and the construction of nationwide asset trading markets as breakthroughs, efforts should advance the building of a unified large market, revitalize existing stock assets, and promote “anti-involution” (reducing wasteful competition and internal churn). It is also necessary to invigorate the financial system, build a multi-tier bond market, and promote the long-term resolution of local government debt, further constructing a social safety net.