16-03-2026

China entered 2026 with stronger than expected economic momentum, supported by robust industrial output, export growth, and policy driven infrastructure spending. Beneath the surface of these positive indicators lie structural vulnerabilities weak domestic demand, rising unemployment, and a prolonged property sector downturn that continue to challenge the sustainability of growth. While the early economic data suggests resilience, global geopolitical tensions, energy market volatility, and trade frictions could reshape the trajectory of the world’s second-largest economy over the coming year.
Chinese government has set a relatively modest GDP growth target of 4.5 to 5% for 2026, marking one of the lowest targets in decades and reflecting policymakers’ cautious outlook. This comes after China achieved its previous target of around 5% growth in 2025, supported largely by a record trade surplus of approximately $1.2 trillion, highlighting the economy’s heavy reliance on exports rather than domestic consumption .
Authorities are tightening oversight of local government subsidies to reduce industrial overcapacity and encourage fair competition across provinces. This move reflects Beijing’s recognition that excessive subsidies have led to oversupply and deflationary pressures in certain industries.

16-03-2026

Industrial output grew 6.3% year on year, accelerating from 5.2% in December 2025, largely driven by strong demand for advanced manufacturing sectors such as AI hardware, semiconductors, and electronics exports. At the same time, retail sales increased by 2.8% year-on-year, up from 0.9% in December, indicating some improvement in consumer activity during the Lunar New Year holiday period. Consumption growth remains modest compared with China’s historical averages of 7 to 9%, highlighting continued caution among households amid property market weakness and uncertain income expectations.

Investment activity also showed mixed signals, Fixed asset investment rose 1.8% year on year, recovering from a 3.8% contraction in 2025, mainly supported by aggressive government spending on infrastructure projects such as transport networks, energy grids, and industrial parks. This is reflected in infrastructure investment growth of 11.4%, indicating that policy stimulus and bank financing are playing a major role in sustaining economic momentum. Ths underlying labour market conditions remain fragile, with the urban unemployment rate rising slightly to 5.3% from 5.1% in December, suggesting weak job creation in the private sector. Meanwhile, China’s export growth surged to 21.8% year-on-year, sharply higher than 6.6% in December 2025, reinforcing the idea that the economy is currently being driven more by external demand particularly for technology and electronics rathr than by domestic consumption.

Exports remain the primary engine driving China’s economic resilience. First two months of 2026, Chinese exports surged 21.8% year on year, fuelled by strong global demand for electronics, semiconductors, and artificial intelligence related technologies. Semiconductor shipments alone increased 66.5%, highlighting China’s growing presence in the global technology supply chain.

Export surge follows a record $1.2 trillion trade surplus in 2025, underscoring the country’s continued dependence on external demand for economic growth. China’s major export markets like ASEAN, Europe, and South Korea have all experienced strong increases in trade volumes, particularly for high value manufacturing products.

However, this reliance on exports has also heightened geopolitical tensions, particularly with Western economies concerned about industrial overcapacity and aggressive pricing in sectors such as electric vehicles, batteries, and solar technology.

16-03-2026

China’s industrial activity during 2026 is beginning to translate into improved demand expectations for base metals such as copper, aluminium, nickel, and zinc, which are closely linked to manufacturing, infrastructure, and power infrastructure investments. With industrial output rising by more than 6% year on year, sectors such as electrical equipment, electronics manufacturing, and machinery production are increasing their consumption of industrial metals. Copper in particular is seeing strong structural demand because it is widely used in electric grids, renewable energy systems, and high technology manufacturing, while aluminium demand is supported by transportation, construction, and packaging industries.

Another important driver for base metals is the sharp rise in infrastructure investment, which has grown by more than 11% year-on-year in China. Infrastructure projects such as railway expansion, power transmission networks, renewable energy installations, and urban development require significant quantities of steel, aluminium, copper, and zinc. As the Chinese government uses infrastructure spending as a tool to stabilize economic growth, these projects create a strong baseline demand for industrial metals. China has been the largest consumer of base metals globally, meaning even moderate increases in infrastructure activity can significantly influence global commodity markets.

Growth in base metals demand is expected to remain moderate rather than explosive, because China’s property sector remains weak and still weighs on construction related metals such as steel and aluminium. Forecasts suggest Chinese demand for refined copper may grow around 2% year on year in 2026, reflecting slower but still positive expansion compared with the rapid growth seen during previous commodity cycles. Overall, the combination of infrastructure spending, export driven manufacturing, and the global energy transition is likely to keep base metals markets structurally supported through the remainder of the decade, even as short term economic uncertainties persist.

Conclusion

Overall, the early economic momentum seen in China during 2026 particularly the 6.3% growth in industrial output and more than 11% expansion in infrastructure investment signals improving demand fundamentals for base metals. As the world’s largest consumer of industrial metals, even moderate growth in China’s manufacturing and infrastructure sectors can significantly influence global commodity markets. Powerful structural trends such as electric vehicle adoption, renewable energy expansion, power grid modernization, and AI driven data center construction are creating sustained long-term demand for metals like copper and aluminium. With global copper demand projected to rise from roughly 26 million tonnes in 2025 to more than 32 million tonnes by 2030, and aluminium demand expected to exceed 120 million tonnes by the end of the decade, the base metals sector appears positioned for a structurally stronger growth phase. While short term volatility may persist due to macroeconomic and geopolitical uncertainties, the combination of industrial recovery and the global energy transition is likely to keep the long term outlook for base metals firmly positive.