China Three things in China

Economics Research 20 September 2026 | 5:21PM HKT

Three quick highlights from China: Hui Shan | Goldman Sachs (Asia) L.L.C. n Slightly lower GDP forecasts: China’s August activity data were mixed. Industrial production growth accelerated from 4.5% yoy in July to 5.2% yoy in August, beating consensus expectations, but retail sales and fixed asset investment disappointed already low expectations. While we still expect sequential growth to accelerate modestly in the coming months, supported by faster government bond issuance and increased infrastructure investment, we lowered our Q3 and Q4 real GDP growth forecasts from 4.6% yoy previously to 4.4% yoy after incorporating the August data. Our 2026 full-year real GDP forecast dropped slightly from 4.6% to 4.5%, at the lower bound of the government’s 4.5-5.0% target range.

We expect sequential growth to pick up slightly in Q3 and Q4 on stronger investment

Percent change, annualized Percent change, annualized 10 10 China Current Activity Indicator and GDP 9 CAI (mom ann) 9 Real GDP (qoq ann) 8 8 GS GDP Forecast 7 7

2 2 Jan-23 Jul-23 Jan-24 Jul-24 Jan-25 Jul-25 Jan-26 Jul-26

Source: NBS, Goldman Sachs Global Investment Research

n Hong Kong’s first Five-Year Plan: Hong Kong unveiled its first Five-Year Plan (FYP, 2026-2030) last week. The plan aims to consolidate Hong Kong’s strengths as an international financial, trade, maritime and aviation hub, while cultivating new growth drivers through innovation and high-tech industries. It reinforces Hong Kong’s role as the world’s largest offshore RMB hub and in helping Beijing accelerate RMB internationalization. Key targets include raising innovation spending from 1.6% of GDP to 3% and increasing manufacturing and new-industrialization value-added from 3.8% of GDP to 5.5%, echoing China’s 15th FYP, which prioritizes technological innovation and a modern industrial system.

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n Trump-Xi Summit preview: According to media reports, President Xi will visit the US during September 23-25. News articles suggest Scott Bessent and He Lifeng will meet beforehand and that AI, trade, and rare earths are among the likely topics of discussion. With the Iran war having escalated in recent weeks, and Iranian Foreign Minister Araghchi meeting with Chinese Foreign Minister Wang Yi in Beijing on September 16, the Iran war is likely to be discussed by Presidents Trump and Xi as well. The PBOC’s USDCNY fixing has moved notably lower in recent days, similar to the pattern ahead of the Trump-Xi meeting in May, sending a friendly signal. USDCNY fell below 6.70 for the first time since 2022. Overall, we think both sides will seek to maintain relative stability in US-China relations, although a broad bilateral agreement appears unlikely, consistent with market views in our recent investor survey.

PBOC daily fixing of USDCNY moved notably lower in recent days

6.5 6.5 Jan-23 Jul-23 Jan-24 Jul-24 Jan-25 Jul-25 Jan-26 Jul-26

Source: Bloomberg, Goldman Sachs Global Investment Research

Recent GS China macro research

Local marketing takeaways, investor survey for Trump-Xi meeting, and thematic research:

China Matters: Path of Least Resistance, 20 September 2026

China: What do local clients think about the economy? Local marketing takeaways, September 2026, 14 September 2026

China: Market expectations for the upcoming Trump-Xi meeting: Signals from our investor survey, 14 September 2026

Asia in Focus: China: Gauging the Impact of Government Bond Supply on Bond Yields, 13 September 2026

Asia in Focus: China: Property Downturn Keeps Straining Local Government Finances, 7 September 2026

Asia in Focus: Why Beijing may favor gradual RMB appreciation, 2 September 2026

Asia Economics Analyst: China’s Broad-Based Export Strength to Persist Despite Limited AI Boost, 23 August 2026