Trivium China Weekly Recap | Support, Not Stimulus

The Central Economic Work Conference (CEWC) concluded on Thursday, wrapping up two days of meetings between China’s senior policymakers, as they finalized their goals for China’s economy next year.

Our top takeaway: Central government spending will increase in 2026, but the good old days of large-scale stimulus aren’t coming back.

• Beijing remains wedded to its goal of delivering productivity-led growth via innovation and industrial upgrading.

• In 2026, officials will deploy additional resources toward putting a floor under the weakest parts of the economy, so they don’t derail the main agenda.

In short, Beijing wants to stabilize the economy — and domestic demand in particular — by providing support, not stimulus.

The big picture

The readout from the CEWC is invariably a big-picture policy document that’s frustratingly thin on detail.

• The details will come in the weeks and months ahead.

• For the time being, we have to make do with the readout’s vague commitments to “optimize” this and “standardize” that.

That said, there are nonetheless certain things we can indeed take away from the CEWC readout.

First, Beijing’s main domestic concern is the:

• “Prominent contradiction between strong supply and weak demand”

That’s not a surprise. Retail sales of consumer goods have been chronically weak all year. Meanwhile, China’s factory output has been going gangbusters.

• Robust export growth has provided China’s manufacturers with some relief — but even then, industrial overcapacity has emerged as a huge problem.

So what is Beijing going to do about it?

The CEWC readout promised to “thoroughly address ‘involutionary’ competition,” but that was the only mention of either involution or overcapacity.

Instead, the demand side of the equation got more airtime, with the readout saying Beijing will:

• “Prioritize domestic demand and build a strong domestic market”

On this front, the biggest commitment to new spending was the readout’s promise that the central government will support the “stabilization and recovery” of investment by:

• “Appropriately increasing the scale of budgetary investment [in public works]”

That’s significant for two reasons.

• First, it acknowledges that the recent collapse in fixed asset investment (FAI) – which declined 12.2% y/y in October and 7.1% in September – is a real problem.

• And second, it shows that Beijing is taking responsibility for reviving investment – and not pushing the fiscal burden down to local authorities.

We’ve already seen Beijing move in this direction. In October, China’s three policy banks — China Development Bank, China ...