ING sets out 10 key questions for China’s economy in 2027

China’s economy is projected to expand by 4.5% in 2027, primarily driven by technology advancements and international trade, according to ING. In a recent report, ING Greater China Chief Economist Lynn Song outlined ten key questions that will shape the nation’s economic trajectory. Among these, ING predicts Beijing will adjust its GDP growth target to approximately 4.5% in 2027, down from the 4.5%-5% forecast for the previous year.

High-single-digit growth in exports is expected, fueled by demand for technology products. However, uncertainties around trade tensions with the U.S. and European Union could pose risks to this growth. Domestic consumption, particularly retail sales, poses a significant challenge. Sales figures only grew by 1.1% in the first three quarters of 2026, indicating weak consumer confidence and limited wage increases.

ING anticipates a modest recovery in consumer spending during 2027, accompanied by a modest uptick in consumer inflation to 1.1%. The Chinese property market, plagued by a downturn, may stabilize but will likely continue to face challenges due to excess inventories and limited investment. ING forecasts a fiscal deficit of around 4% of GDP and a 10-basis-point interest rate reduction by the People’s Bank of China.

The bank anticipates the Chinese yuan will continue to appreciate, potentially reaching 6.50 per USD by the end of the year, accompanied by heightened exchange rate volatility. Chinese government bonds might experience selling pressure as investor sentiment improves. ING forecasts the 10-year sovereign yield to reach 1.9%. Artificial intelligence (AI) is another critical factor in China’s economic outlook.

While technology investments have bolstered manufacturing and exports, automation could exacerbate job displacement at the entry-level. ING also examined China’s broader economic transition, noting advancements in advanced manufacturing, renewable energy, and digitalization. However, these improvements have yet to translate into comparable gains in household consumption.

ING emphasizes that bolstering domestic demand will be crucial as China’s widening trade surplus attracts increased scrutiny from its trading partners.