China
For the first time in decades, China revised its target growth to under 5%. This is in recognition of the impact of tariffs as well as challenges in the real estate sector in China. This slowing growth rate will have an impact on the global economy.
We continue to believe that the United States is still best positioned in the global economy on a relative basis. China was a dominant competitor when labor rates were low; that advantage has been taken away.
We are not a believer in the hype that you sometimes read in the press that one should focus on international investments over the United States. We just don't believe the data suggests that the international story is so compelling that it necessitates a huge shift in allocations.
A recent CNBC article highlighted the slowing GDP projections for China. Excerpts are provided here.
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“China on Thursday set its GDP growth target for 2026 at 4.5% to 5% — the lowest target on record going back to early 1990s — as Beijing grapples with persistent deflationary pressures and trade tensions with the U.S.
That target, stated in the government work report released Thursday, marks a downgrade from the “around 5%” set in the past three years and is the most modest goal on record for the world’s second largest economy, barring 2020 when Beijing did not set a growth target due to the pandemic.
Beijing also kept its budget deficit target unchanged from last year’s “around 4%” of GDP, as the National People’s Congress, the country’s top legislative body, holds its annual meeting this week.
The 4% deficit target first set in 2024 was the highest on record going back to 2010, according to data accessed via Wind Information. The prior high was 3.6% in 2020.
Chinese policymakers kept their annual consumer inflation target steady at “around 2%.” First set in 2025, that’s the lowest level in more than two decades and signals an implicit acknowledgement by Beijing of lackluster domestic demand.
The inflation goal acts more as a ceiling than a target to be realized. For all of 2025, price growth was flat, and came in at 0.7% when excluding food and energy prices, as consumer confidence remained soft.”
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Source: https://www.cnbc.com/2026/03/05/china-gdp-two-sessions-.html
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