Goldman Sachs has recommended that investors increase their exposure to Chinese equities, saying the market is well positioned for a cyclical and structural recovery and could deliver annual returns of 15% to 20% in both 2026 and 2027.
In a new macro outlook report titled “China 2026 Outlook: Exploring New Growth Drivers,” the U.S. investment bank said China’s economic growth momentum is expected to improve next year, supported by a combination of policy stimulus, industrial upgrading and a shift in the structure of domestic demand.
Goldman said it now recommends overweighting Chinese stocks, citing attractive valuations, improving earnings prospects and multiple emerging growth drivers.
According to the report, China’s exports are expected to maintain “structural upside potential” in 2026 as the country continues to move up the value chain in manufacturing and expand its presence in global markets.
At the same time, investment growth is likely to rebound with stronger policy support, particularly in infrastructure, advanced manufacturing and strategic emerging industries. Policymakers are also placing greater emphasis on services consumption, with measures aimed at expanding paid leave, increasing holidays and encouraging household spending on travel, leisure and healthcare.
Goldman said these shifts signal a broader effort to rebalance China’s growth model toward higher-quality, more sustainable drivers.
The report also highlighted the priorities outlined in proposals related to China’s upcoming 15th Five-Year Plan (2026–2030), where building a “modern industrial system” and accelerating “high-level technological self-reliance” have been identified as key strategic goals.
These priorities, Goldman said, are likely to support continued strength in China’s exports and current account position over the coming years, particularly in high-tech manufacturing, green energy, digital industries and advanced equipment.
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