Three economic flashpoints for 2026

This report is taken from this week’s CNBC The China Connection newsletter, which brings you insights and analysis on what’s driving the world’s second-largest economy. You can subscribe here.

It was the first major economy to retaliate against US “Liberation Day” tariffs, and has increasingly played the rare earth card. Its technology companies overcame US chip restrictions and released them Low-cost AI models Which competes with higher-priced offerings from the US, such as those from OpenAI. Global perceptions of China It gets better.

It is unclear whether the broader Chinese economy embodies the same level of confidence.

The country’s top leaders are expected to discuss policy plans for 2026 at the annual Central Economic Work Conference next week. While the dates have not been officially announced, the conference has continued from From December 11 to 12 last year.

Here are three main factors that economists watch:

China’s real estate woes have worsened this year on many fronts, most recently the focus on the real estate giant FunkyHer financial struggles.

It was Vanke, which was once one of China’s largest developers in terms of sales and an iconic local brand Seeking delay Repayment of 2 billion yuan ($283 million) of local bonds due on December 15. This news prompted the Standard & Poor’s credit ratings agency to… Reduce Funke’s debt Late last week.

“Home buyer confidence in China was already very fragile, so [Vanke has to pursue distressed financing] “This will likely impact sentiment further,” said Edward Chan, director of corporate ratings at S&P Global Ratings.

“This may also lead to a decline in property sales across the country,” he said. He added that the mortgage support plan It is said to be under discussion This is unlikely to reflect the decline in property sales.

New home sales in November were down 20% to 30% compared to last year, Goldman Sachs said over the weekend. “In our view, the prospects for implementing another set of real estate mitigation measures have increased,” the analysts said.

But how bad is So Bad?

As of October, average monthly sales nationwide were still 65.3 billion yuan below 2024 levels, Chan noted.

“It is now difficult to gauge what level the government will believe is a level of wider concern.”

After a five-year planning meeting in late October, policymakers showed greater resolve Promoting local consumption. That was just days before top leaders, including Chinese President Xi Jinping, left Beijing for high-level trade talks with the United States and other countries.

Last week, six ministries jointly issued a comprehensive plan to develop consumer industries ranging from electronics to sporting goods. There must be at least three sectors worth 1 trillion yuan Each by 2027, and another 10 should reach 100 billion yuan during the same period, the document said. But the plan did not specify how.

“There are no financing arrangements and implementation details,” Goldman Sachs analysts said in a report over the weekend, noting a clear focus on integrating artificial intelligence into the development of consumer products and services.

“Overall, this plan is entirely supply-side focused, and we continue to believe that sustainable consumption growth will require policy support for job creation and income gains,” the analysts said.

What is worrying is that the rate of bad loans to households in China reached 1.33% in the first half of this year. Exceeding the corporate rateWhich fell to 1.2%, according to Natixis.

Gary Ng, chief economist at Natixis, said companies can restructure, but households have far fewer options, especially amid ongoing pressures from property and labor markets.

Even with promotions running from early October to mid-November, China’s biggest shopping event of the year saw sales grow slow to 14.2% Up from 26.6% last year, according to a third-party analysis.

The headline inflation rate has hovered Close to zero In recent months. But a much larger increase of 1.2% in The “core” CPI, which excludes food and energy priceshardly reassuring either.

Nomura’s chief China economist, Ting Lu, estimated last week that nearly a quarter of those inflation gains came from higher gold prices, according to his analysis of official figures. If we exclude that, the core CPI was just 0.9% in October, he said.

Lu expects Beijing to strengthen its political support in the spring in order to get a strong start to the country’s next five-year plan.

China is scheduled to release November inflation data on December 10, followed by retail sales, industrial production and investment figures on December 15.

Bubble robot robot? Spokesman for the Chinese Economic Agency Friday warning From the abundance of humanoid robots with more than 150 companies rushing into this sector. The agency plans to issue industry guidance.

Alibaba launches artificial intelligence glasses. On the heels of a revamped AI application, the Chinese e-commerce giant began sales of its smart tires on Thursday for $500 in Chinaa market where Meta Ray-Ban Display glasses are not officially available.

Hong Kong fire attracts donors Major Chinese companies from Tencent to Alibaba’s Ant Group Pledge millions To support rescue efforts following the deadliest fire in Hong Kong since 1948 last week. At least 156 people have died.

December 3-5: French President Emmanuel Macron Visit China

December 8: Chinese trade data for November

December 10: CPI and PPI for November