China Sets 2026 GDP Target at 4.5%–5% with Deficit Ratio ~4% — Room for RRR Cuts Remains

China Sets 2026 GDP Target at 4.5%–5% with Deficit Ratio at ~4%

The 'Two Sessions' policy benchmark sets China's 2026 GDP growth target at 4.5%–5% with a fiscal deficit ratio of approximately 4%. The PBOC maintains a 'proactive' monetary posture with flexibility. With the average financial institution RRR still at 6.3%, there is meaningful room for further cuts.

FX Impact: The combination of moderate growth targets and accommodative fiscal-monetary policy signals strong policy support for the real economy, which underpins long-term RMB stability even as near-term easing creates mild currency softness.