China Unveils Its 2026 Economic Priorities
Key Takeaways and Transcript from the Central Economic Work Conference
I must apologize to my readers for posting too often this week. But there’s no way I can miss this topic.
As the Central Economic Work Conference concludes today, the priorities of the Chinese economic agenda have been revealed. As I expected in previous episodes, domestic demand has maintained its position as the top priority. I also forecast the concept of “investing in people” (投资于人) to be one of the main focuses of this year’s CEWC, and I’m glad to see that the readout contains more details on this.
The “Five Musts” (五个必须) part represents an elevation of the past year’s policy practice. “fully tap economic potential,” “combine policy support with reform and innovation,” “achieve both ‘letting go’ and ‘managing well’”
Particularly noteworthy is the fresh emphasis on “combining investment in physical projects with investment in people” and on “sharpening internal capabilities to respond to external challenges.” This latter point is especially relevant given that 2026 is anticipated to be a year of truce (I hope it can be) in the China-US trade tensions. Both sides are likely to use this period to resolve or reduce economic vulnerabilities.
Regarding consumption, while the conference continues to promote “special actions to boost consumption,” I would like to highlight the more systematic approach signaled by the “Urban and Rural Resident Income Enhancement Plan.” This represents a shift toward stimulating consumption from the income side.
In the reform section, the call to “promote win-win development for platform enterprises, businesses on platforms, and workers” stands out. In the livelihood sector, in addition to “employment stabilization, expansion, and quality improvement actions,” It emphasizes gig workers participating in employee insurance. In my view, this sends a more proactive and labor-friendly signal.
Overall, compared with last year’s emphasis on extraordinary measures to stimulate market confidence, this year’s formulations are more moderate, focusing more on structural adjustment and enhancing the effectiveness of existing policies. In addition to revisiting the concept of “cross-cycle adjustment” rather than “counter-cyclical adjustment,” this year’s communiqué places greater emphasis on “fully utilizing existing policies” and curbing “involutionary competition.” My interpretation is that this encourages different regions to develop based on their merits and to avoid homogenized competition. Another signal is that the sequence of “preventing risks” has been moved from no. 5 to the last. This may suggest that Chinese policymakers believe the real estate sector has moved beyond its most dangerous period.
Regarding real estate, the readout shows a more “supply-side price regulation” strategy, which is more targeted at new homes. For the existing housing stock, the focus is on “encouraging the acquisition of commercial housing inventory primarily for conversion into affordable housing” which has been going on for a while.
The priorities for China’s economy next year are sequenced as follows:
Adhere to domestic demand as the driving force and build a strong domestic market.
Adhere to innovation-driven development and accelerate the cultivation and strengthening of new growth drivers.
Adhere to reform breakthroughs and enhance the momentum and vitality of high-quality development.
Adhere to opening up and promote win-win cooperation across multiple fields.
Adhere to coordinated development and promote urban-rural integration and regional coordination.
Adhere to “dual carbon” leadership and promote comprehensive green transformation.
Adhere to putting people’s livelihood first and strive to deliver more tangible benefits for the people.
Adhere to safeguarding bottom lines and actively and prudently resolve risks in key areas.
Below is the English version I made with the help of AI:
Central Economic Work Conference Held in Beijing
Xi Jinping Delivers Important Speech; Li Qiang Delivers Closing Remarks
Zhao Leji, Wang Huning, Cai Qi, Ding Xuexiang, and Li Xi Attend the Conference
The Central Economic Work Conference was held in Beijing from December 10 to 11. Xi Jinping, General Secretary of the CPC Central Committee, President of the People’s Republic of China, and Chairman of the Central Military Commission, attended the conference and delivered an important speech. Members of the Standing Committee of the Political Bureau of the CPC Central Committee—Li Qiang, Zhao Leji, Wang Huning, Cai Qi, Ding Xuexiang, and Li Xi—attended the conference.
In his important speech, Xi Jinping summarized the economic work of 2025, analyzed the current economic situation, and made arrangements for economic work in 2026. Li Qiang delivered closing remarks, putting forward requirements for implementing the spirit of General Secretary Xi Jinping’s important speech and doing a good job in economic work next year.
The conference pointed out that this year has been an extraordinary year. The Party Central Committee with Comrade Xi Jinping at its core has united and led the entire Party and people of all ethnic groups across the country to rise to challenges and work hard. We have unswervingly implemented the new development philosophy, promoted high-quality development, coordinated both domestic and international situations, and implemented more proactive and effective macro policies. The main targets for economic and social development will be successfully completed. China’s economy has advanced under pressure, developed toward innovation and optimization, continued to build a modern industrial system, taken new steps in reform and opening up, made positive progress in resolving risks in key areas, and strengthened people’s livelihood protection. Over the past five years, we have effectively responded to various shocks and challenges, promoted new major achievements in the cause of the Party and the country, and the 14th Five-Year Plan is about to be successfully concluded, achieving a good start in the new journey toward the Second Centenary Goal.
The conference believes that through practice, we have gained new understanding and experience in doing economic work under the new situation: we must fully tap economic potential; we must combine policy support with reform and innovation; we must achieve both “letting go” and “managing well”; we must closely integrate investment in things with investment in people; and we must strengthen our internal capabilities to respond to external challenges.
The conference pointed out that there are still many old problems and new challenges in China’s economic development. The impact of changes in the external environment has deepened, the contradiction between strong domestic supply and weak demand is prominent, and there are many risks and hidden dangers in key areas. Most of these are problems in development and transformation that can be solved through effort. The supporting conditions and basic trends for China’s long-term economic improvement have not changed. We must strengthen confidence, make good use of our advantages, respond to challenges, and continuously consolidate and expand the momentum of economic stability and improvement.
The conference emphasized that to do a good job in economic work next year, we must be guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, thoroughly implement the spirit of the 20th Party Congress and all plenary sessions of the 20th Central Committee, fully, accurately, and comprehensively implement the new development philosophy, accelerate the construction of a new development pattern, focus on promoting high-quality development, adhere to the general principle of seeking progress while maintaining stability, better coordinate domestic economic work with international economic and trade struggles, better coordinate development and security, implement more proactive and effective macro policies, enhance the foresight, targeting, and synergy of policies, continuously expand domestic demand and optimize supply, improve increments and revitalize existing stock, develop new quality productive forces according to local conditions, deepen the construction of a unified national market, continuously prevent and resolve risks in key areas, focus on stabilizing employment, enterprises, markets, and expectations, promote effective qualitative improvement and reasonable quantitative growth of the economy, maintain social harmony and stability, and achieve a good start to the 15th Five-Year Plan.
The conference pointed out that in terms of policy orientation, economic work next year should adhere to seeking progress while maintaining stability and improving quality and efficiency, leverage the integrated effect of existing and incremental policies, increase counter-cyclical and cross-cyclical adjustments, and improve the effectiveness of macroeconomic governance. We must continue to implement a more proactive fiscal policy, maintain necessary fiscal deficits, total debt scale, and total expenditure, strengthen scientific fiscal management, optimize the structure of fiscal expenditure, and standardize tax incentives and fiscal subsidy policies. We must pay attention to solving local fiscal difficulties and ensure the bottom line of “three guarantees” at the grassroots level. We must enforce strict fiscal discipline and maintain austerity in Party and government organs. We must continue to implement a moderately accommodative monetary policy, make promoting stable economic growth and reasonable price recovery important considerations for monetary policy, flexibly and efficiently use various policy tools such as reserve requirement ratio cuts and interest rate cuts, maintain ample liquidity, smooth the monetary policy transmission mechanism, and guide financial institutions to strengthen support for key areas such as expanding domestic demand, technological innovation, and small, medium, and micro enterprises. We must maintain the basic stability of the RMB exchange rate at a reasonable and balanced level. We must enhance the consistency and effectiveness of macro policy orientation, incorporate various economic and non-economic policies, existing and incremental policies into the consistency assessment of macro policy orientation, and improve the expectation management mechanism to boost social confidence.
The conference determined that economic work next year should focus on the following key tasks:
First, adhere to domestic demand dominance and build a strong domestic market. Deeply implement special actions to boost consumption and formulate and implement income increase plans for urban and rural residents. Expand the supply of quality goods and services. Optimize the implementation of “two new” policies. Clear unreasonable restrictive measures in the consumption sector and release the potential of service consumption. Push for investment to stop declining and stabilize, appropriately increase the scale of central budget investment, optimize the implementation of “two key” projects, optimize the management of local government special bond uses, continue to leverage the role of new policy-based financial instruments, and effectively stimulate the vitality of private investment. Promote high-quality urban renewal.
Second, adhere to innovation-driven development and accelerate the cultivation and strengthening of new growth drivers. Formulate a plan for integrated promotion of education, science and technology, and talent development. Build international science and technology innovation centers in Beijing (Beijing-Tianjin-Hebei), Shanghai (Yangtze River Delta), and the Guangdong-Hong Kong-Macao Greater Bay Area. Strengthen the principal position of enterprises in innovation and improve the intellectual property protection system in emerging fields. Formulate an action plan for expanding capacity and improving quality in the service industry. Implement a new round of high-quality development actions for key industrial chains. Deepen and expand “AI+,” and improve AI governance. Innovate technology and finance services.
Third, adhere to reform breakthroughs and enhance the dynamism and vitality of high-quality development. Formulate regulations for building a unified national market and thoroughly address “involutionary” competition. Formulate and implement a plan for further deepening state-owned asset and enterprise reform, and improve supporting laws, regulations, and policies for the private economy promotion law. Accelerate the clearing of overdue payments to enterprises. Promote win-win development among platform enterprises, platform operators, and workers. Expand pilot programs for market-oriented reform of production factors. Improve the local tax system. Deepen the reduction and quality improvement of small and medium-sized financial institutions, and continuously deepen comprehensive reform of capital market investment and financing.
Fourth, adhere to opening up and promote win-win cooperation in multiple fields. Steadily advance institutional opening up, orderly expand autonomous opening in the service sector, optimize the layout and scope of free trade pilot zones, and solidly promote the construction of the Hainan Free Trade Port. Promote the integrated development of trade and investment, and the integration of domestic and foreign trade. Encourage and support service exports, and actively develop digital trade and green trade. Deepen the reform of the foreign investment promotion system and mechanism. Improve the overseas comprehensive service system. Promote high-quality development of the Belt and Road Initiative. Push for the signing of more regional and bilateral trade and investment agreements.
Fifth, adhere to coordinated development and promote urban-rural integration and regional linkage. Coordinate urbanization construction with counties as important carriers and comprehensive rural revitalization, and promote high-quality development of county economies. Strictly observe the red line for arable land, pay close attention to grain production, and promote prices of grain and other important agricultural products to remain at reasonable levels. Continue to consolidate and expand poverty alleviation achievements, incorporate normalized assistance into the overall implementation of the rural revitalization strategy, and firmly guard against large-scale return to poverty. Support economically strong provinces to shoulder greater responsibilities. Strengthen coordination and linkage among key urban clusters and deepen cross-administrative cooperation. Strengthen overall planning for major bays and promote high-quality development of the marine economy.
Sixth, adhere to “dual carbon” leadership and promote comprehensive green transformation. Deeply advance energy conservation and carbon reduction transformation in key industries. Formulate the outline of the energy power construction plan, accelerate the construction of a new energy system, and expand the application of green electricity. Strengthen the construction of the national carbon emissions trading market. Implement comprehensive treatment actions for solid waste, deepen the battle for blue skies, clear waters, and clean soil, and strengthen the treatment of new pollutants. Solidly promote the “Three-North” project offensive, and implement the integration and optimization of nature reserves. Strengthen the construction of meteorological monitoring, forecasting, and early warning systems, accelerate making up for shortcomings in flood control, drainage, and disaster resistance infrastructure in northern regions, and improve the ability to respond to extreme weather.
Seventh, adhere to people’s livelihood as paramount and strive to do more practical things for the people. Implement actions to stabilize jobs, expand capacity, and improve quality; stabilize employment for key groups such as university graduates and migrant workers; and encourage and support flexible employment personnel and new employment format personnel to participate in employee insurance. Advance the adjustment of the layout and structure of educational resources, increase the supply of general high school places and enrollment in quality undergraduate programs. Optimize centralized drug procurement and deepen reform of medical insurance payment methods. Implement rehabilitation and nursing expansion and improvement projects, promote long-term care insurance systems, and strengthen care and assistance for disadvantaged groups. Advocate positive views on marriage and childbearing and strive to stabilize the scale of newborns. Do solid work in production safety, disaster prevention, mitigation and relief, and food and drug safety.
Eighth, adhere to defending bottom lines and actively and prudently resolve risks in key areas. Focus on stabilizing the real estate market, implement city-specific policies to control increments, reduce inventory, and optimize supply, and encourage the purchase of existing commercial housing for use primarily as affordable housing. Deepen housing provident fund system reform and promote the construction of “good housing” in an orderly manner. Accelerate the construction of a new model for real estate development. Actively and orderly resolve local government debt risks, urge localities to proactively reduce debt, and prohibit the irregular addition of new hidden debts. Optimize debt restructuring and replacement methods, and resolve operational debt risks of local government financing platforms through multiple measures.
The conference pointed out that we must consciously align our thoughts and actions with the Party Central Committee’s scientific judgment of the situation, grasp the general trend of China’s development, and strengthen confidence in future development. We must fully implement the overall requirements and policy orientation of economic work next year, adhere to a positive and pragmatic goal orientation, focus on solving existing difficulties and problems, make greater breakthroughs in effective qualitative improvement, and enhance the sense of gain for residents and enterprises; enhance the synergistic effect of reforms and policies, and promote the continuous improvement of economic operation and market expectations. We must grasp the key focus points of economic work next year in the overall situation: focus on strengthening the domestic circulation and expanding new space for domestic demand growth; focus on developing new quality productive forces and promoting deep integration of technological innovation and industrial innovation; focus on stimulating the dynamism and vitality of high-quality development and unswervingly deepen reform and opening up; focus on continuously improving people’s well-being and increase efforts to ensure and improve people’s livelihood; and focus on defending security bottom lines and prudently carry out risk resolution in key areas.
The conference emphasized that we must strengthen the Party’s comprehensive leadership over economic work and form a unified will and strong synergy. We must uphold the centralized and unified leadership of the Party Central Committee, and all regions and departments should combine actual conditions, adapt to local circumstances, and fully implement the Party Central Committee’s ideas, tasks, and policies for economic work next year. We must establish and practice a correct view of political achievements, insist on producing political achievements for the people and through hard work, consciously act according to laws, and improve differentiated assessment and evaluation systems. We must compile national and local 15th Five-Year Plans and special plans in accordance with the “Recommendations” of the Fourth Plenary Session of the 20th Central Committee, and promote high-quality and sustainable development. We must create a good political environment, talent environment, business environment, and public opinion environment, strengthen policy publicity and interpretation, and fully stimulate positive social energy.
The conference requires doing a good job in ensuring the supply of important consumer goods for people’s livelihood at the end of the year and the beginning of the new year, caring for the production and livelihood of people in difficulty, and resolutely preventing and curbing major accidents.
The conference called on the entire Party and society to unite more closely around the Party Central Committee with Comrade Xi Jinping at its core, work together with one heart and forge ahead, strive to achieve the economic and social development goals and tasks for next year, and ensure a good start to the 15th Five-Year Plan.
Members of the Political Bureau of the CPC Central Committee, members of the Secretariat of the CPC Central Committee, Vice Chairmen of the Central Military Commission, relevant leading comrades of the Standing Committee of the National People’s Congress, State Councilors, the President of the Supreme People’s Court, the Procurator-General of the Supreme People’s Procuratorate, relevant leading comrades of the National Committee of the Chinese People’s Political Consultative Conference, and members of the Central Military Commission attended the conference.
The main Party and government leaders of provinces, autonomous regions, municipalities directly under the Central Government, cities specifically designated in the state plan, and the Xinjiang Production and Construction Corps; the main responsible comrades of relevant departments of the Central Committee and state organs, relevant people’s organizations, some centrally managed financial institutions and enterprises, and various departments of the Central Military Commission attended the conference.