TD Securities analysts expect Premier Li to announce a 2026 GDP growth target of 4.5%–5.0% at the Two Sessions. They also expect a broad budget deficit near 9% of GDP, which would signal a loose, supportive fiscal policy.
In 2026, policy is likely to center on boosting domestic demand. That support is expected to come from both consumption measures and investment-led policies.
Gradual Shift Toward Consumption
The move toward consumption is expected to be gradual, with the goal of widening China’s growth drivers. This shift is tied to weak Fixed-Asset Investment (FAI) in the second half of 2025.
Targeted consumer support is expected to continue. The consumer trade-in program is highlighted as a key stimulus tool that may run into 2026.
With the Two Sessions approaching, we expect an official 2026 GDP growth target of 4.5%–5.0%. This growth would likely be supported by a large budget deficit close to 9% of GDP, showing a strong push to stimulate the economy.
This stronger fiscal stance is a response to weak data in the second half of 2025. Full-year FAI growth in 2025 was only 2.8%, a multi-year low, mainly because the property sector remained under pressure. Policymakers may now lean more on domestic demand to fill this gap.
Derivatives And Market Positioning
For derivatives traders, this setup may favor call options on industrial commodities in the weeks ahead. Iron ore has been consolidating around $120–$125 per tonne. If policymakers confirm new infrastructure spending, prices could move higher. Copper futures may also benefit, since they tend to react to changes in manufacturing and construction.
In FX markets, more stimulus would likely support the Australian dollar, which is often used as a proxy for Chinese demand. Traders may look at long positions in AUD/USD futures to benefit from stronger commodity prices. At the same time, a deficit this large could pressure the offshore yuan (CNH), which may create a chance to short CNH versus the US dollar.
We are also watching equity derivatives tied to consumer sectors. If the consumer trade-in program continues, specific companies may benefit. The program helped lift auto sales by more than 12% in late 2025. Call options on ETFs focused on Chinese consumer discretionary stocks and electric-vehicle makers may be worth considering.
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