China: Two Sessions set 2026 growth path – TD Securities

💡 DMK Insight

China’s GDP target of 4.5–5.0% for 2026 is a signal for traders: it suggests a focus on domestic demand and potential volatility in related markets. A broad budget deficit near 9% of GDP indicates that the government is willing to inject liquidity to stimulate growth. This could lead to increased spending in sectors like consumer goods and infrastructure, which might benefit stocks in those areas. However, keep an eye on the yuan’s performance against the dollar; if the deficit raises concerns about fiscal sustainability, we could see depreciation in the yuan, impacting forex traders. The 4.5–5.0% target also sets a lower bar for expectations, meaning any deviation could lead to sharp market reactions. For traders, monitoring the upcoming Two Sessions for specific policy announcements will be crucial. Look for any hints on stimulus measures or fiscal policies that could affect market sentiment. The immediate focus should be on how these developments impact the Chinese stock market and the yuan, especially if the budget deficit raises eyebrows among investors.