Can China's economy keep running in the Year of the Horse?

After China celebrated its Lunar New Year, some China skeptics have returned with a familiar question: what lies ahead for the world's second-largest economy in 2026? Facts speak louder than words: Having pulled through a challenging year, China enters the new year with momentum stronger than many had expected.

Finding its footing: Stronger resilience under pressure

In 2025, China's economy did not stumble under tariff pressures as some observers had anticipated. Instead, it held steady. China's GDP surpassed 140 trillion yuan for the first time, roughly the combined economic output of Germany, Japan, India, the UK and Italy. With about 17 percent of global GDP, China contributed 30 percent of global growth at a time when the world economy was broadly sluggish.

Global demand for Chinese goods remained strong. In 2025, China's merchandise trade continued to grow for the ninth consecutive year, recording trade growth with over 190 countries and regions and becoming a major trading partner for over 160 of them. High-tech and mechanical exports accounted for the bulk of the growth.

International observers took note. The Wall Street Journal reports that China's sustained strong growth last year defied expectations that tariffs would slow its growth. Le Monde similarly notes that this growth showed greater resilience under tariffs. Despite persistent skepticism in parts of the Western media, major international institutions, like the IMF and World Bank, revised up their growth forecast for China in 2026. IMF Managing Director Kristalina Georgieva noted that China has shown notable resilience and retains the potential for stronger growth.

Building for the long run: A stronger economic frame

China is now focused on quality over the size of development. The goal is a robust structure with solid foundations rather than a superficially large but fragile economy.

In 2025, China's high-tech manufacturing and equipment manufacturing grew much faster than the industrial average, with high-tech sales up 13.9 percent. Service and consumer robotics alone surged by nearly 60 percent in revenue, capturing both domestic and global attention.

More importantly, China's factories are transforming from followers to pace-setters. Among the over 220 leading smart factories highlighted by the 2026 World Economic Forum "Global Lighthouse Network," 101 are in China, showcasing how Chinese industrial innovation is increasingly becoming a global benchmark.

Consumption in China remains far more resilient than often portrayed in Western media. In 2025, retail sales surpassed 50 trillion yuan, with final consumption expenditure contributing 52 percent of economic growth. Demand for big-ticket items also remained robust, particularly for home appliances and new energy vehicles—a sector in which China continues to lead the world in both production and sales.

At the same time, "experience-driven" consumption—concerts, festivals, and collectibles—is surging, reflecting the growing willingness of Chinese consumers to spend on lifestyle and entertainment. During the 2026 Spring Festival, ice-and-snow tourism jumped by a staggering 120 percent, winter-escape trips rose by 68 percent, and hotel bookings grew by 33 percent, signaling that Chinese consumption continues to gain momentum.

Picking up speed: Powering future growth

Two indicators highlight China's longer-term potential.

First, electricity consumption. In 2025, China's annual electricity use topped the world with a total of over 10 trillion kilowatt-hours, more than twice that of the US.

This rapid electrification is anchored by the world's largest clean power system. More than one-third of China's electricity comes from renewable sources, providing abundant and affordable electricity for emerging industries such as electric vehicles, data centers and artificial intelligence. Elon Musk has argued that China's advantage in AI lies partly in its power supply capacity, while The Economist and the Financial Times note that China's energy transition is reshaping future industrial geography.

Second, R&D spending. China invested 3.9 trillion yuan in R&D in 2025, ranking second globally. Its R&D intensity surpassed the OECD average, placing it among the global top 10 for innovation.

Notably, Chinese companies accounted for over 75 percent of the nation's total R&D spending and 77 percent of its growth. In 2024, 525 Chinese firms were listed among the world's top 2,000 corporate R&D investors. Breakthroughs in AI have become a core competitive edge for China, as exemplified by the recent launch of the SeeDance 2.0 AI video generation model.

Opening the track: Running with the world

While protectionism resurges in parts of the world, China continues to open wider. In 2025, China remained the world's second-largest import market for the 17th consecutive year, with increased imports from over 130 countries and regions. It approved import of 190 new agricultural and food products from 65 countries and regions, with total agricultural imports nearing 1.5 trillion yuan. The 8th China International Import Expo attracted over 4,000 companies from more than 130 countries and regions, resulting in intended deals exceeding 80 billion dollars.

Despite the clamor for "decoupling from China" by some Western politicians, foreign companies voted with their feet: over 70,000 new foreign-invested enterprises were established in China last year, up 19 percent year on year. German investment in China reached a four-year high, and a KPMG survey found that 94 percent of multinationals remain committed to investing in the country.

Tourism also shows renewed confidence. Over 3 million visa-free foreign visitors entered China in 2025, and tax-free shopping sales nearly doubled. Shanghai alone welcomed 7 million international visitors, up nearly 50 percent. During the Spring Festival, inbound flight bookings skyrocketed by 312 percent in the first five days, with some countries' visitors growing more than nine-fold.

China's path is clear: pursuing quality over speed—growing not necessarily fast, but in a steady, innovative, and sustainable way, while staying globally connected. By staying this course, China is well-positioned to convert its momentum into fresh, tangible progress.

The author is a commentator on international affairs, contributing regularly to Xinhua News, Global Times, China Daily, CGTN, etc. He can be reached at shaoxia2019@163.com.