China’s economic forecast: Navigating the challenges ahead for China’s dual-track economy in 2026

Shifting Global Economic Prospects

Back in April of last year, the international economic forecast appeared bleak, with many anticipating that the US-driven trade conflict would significantly impact leading economies. However, since then, projections for global growth have consistently improved, as illustrated in Chart 1.

While much attention has centered on the robust performance of the US economy—largely attributed to a surge in AI-related investments—there has been less discussion about how China has managed to withstand economic pressures. In fact, China encountered even greater obstacles than the US in 2025, becoming the primary focus of President Trump’s newly imposed tariffs. Simultaneously, China’s domestic market continued to grapple with deep-rooted issues, such as a declining and rapidly aging population.