Economics – Regional Knowledge Sharing Initiative

ADB Forecasts Resilient GDP Growth in the PRC in 2026, a Pick Up in Inflation

MANILA, PHILIPPINES (10 April 2026) — Economic growth in the People’s Republic of China (PRC) is projected to moderate to 4.6% in 2026 and 4.5% in 2027, while inflation is expected to edge up amid higher global energy prices and external uncertainty, according to the Asian Development Outlook (ADO) April 2026, released today by the Asian Development Bank (ADB).

The PRC economy expanded by 5.0% in 2025, supported by strong exports and resilient industrial activity. However, subdued household consumption and a prolonged downturn in the property sector are expected to weigh on growth. Exports and government investment in strategic and high-tech sectors are projected to remain key near-term growth drivers, partly offsetting weak domestic consumption and uncertainty in external demand due to the conflict in the Middle East.

“Exports, investment in advanced manufacturing and services are expected to continue supporting growth, but reviving household consumption will be critical for sustaining momentum,” said ADB Country Director for the PRC Asif S. Cheema. “Policies that strengthen income prospects, social protection, and consumer confidence will play an important role in supporting domestic consumption. We also need to continue monitoring the macroeconomic implications of the Middle East conflict.”

Inflation is forecast to rise to 0.6% in 2026 and 1.0% in 2027, from 0.0% in 2025, reflecting rising food costs and other factors, such as anti-involution efforts and higher global energy prices driven by the Middle East conflict.

Fiscal policy is expected to remain supportive, with greater emphasis on social spending. Monetary policy is also projected to stay accommodative to support growth, particularly in services consumption and strategic sectors.

Downside risks to the outlook have increased. If global energy prices remain elevated and supply chain disruptions persist, this could dent growth through higher energy costs, supply chain and trade disruptions, tighter financial conditions, and weaker investment and consumption sentiment. Additional upward pressures on production costs and a worsened business environment stemming from a prolonged Middle East conflict could weigh on corporate profitability, employment, and private investment and consumption sentiment.

ADB is a leading multilateral development bank supporting sustainable, inclusive, and resilient growth across Asia and the Pacific. Working with its members and partners to solve complex challenges together, ADB harnesses innovative financial tools and strategic partnerships to transform lives, build quality infrastructure, and safeguard our planet. Founded in 1966, ADB is owned by 69 members—50 from the region.

The PRC Vice Minister Liao Outlines Key Perspectives for High‑Quality Development at RKSI Seminar

Vice Minister of Finance of the People’s Republic of China (PRC) Liao Min outlined key perspectives on high‑quality growth at a seminar held at ADB Headquarters in Manila on 9 April 2026.

The seminar, organized by RKSI on the topic of “Beyond the Horizon—the PRC’s Economy and Regional Prosperity”, saw the Vice Minister delivering a keynote speech and appearing on a panel alongside ADB Vice-President Scott Morris and ADB Chief Economic Albert Park. The event attracted around 400 ADB staff and members of the Board of Directors, including more than 100 online participants.

In his keynote speech, Mr. Liao appreciated ADB’s role over the last 40 years in promoting economic and social development in the PRC, and highlighted that the PRC has been a strong supporter of ADB in fulfilling its mandate and mission. Standing at the new starting point following four decades of partnership, the PRC and ADB should explore new areas of cooperation and further deepen their comprehensive, mutually beneficial collaboration.

Turning to the seminar’s main theme, he emphasized that “High quality means sustainability.” The PRC’s total economic output exceeded RMB140 trillion last year, Mr. Liao said. Although economic growth remained moderate, the PRC’s contribution to global economic growth remained about 30%. He said the PRC is continuously optimizing its economic structure while promoting green and low-carbon development, digital transformation, increased consumption, and expanded effective investment.

“Consumption is the leading engine of the PRC’s economic growth,” he said. “In order to further unleash the domestic consumption potential, the Chinese government has put more domestic consumption as the priority of our rebalancing efforts.”

He said the PRC’s imports reached RMB18.5 trillion (about $2.6 trillion) in 2025, making the PRC the world’s second-largest import market for the 17th straight year, after the US. The PRC also saw its imports grow from more than 130 countries and regions and is now the major export destination for nearly 80 economies. “PRC has a vast market of 1.4 billion people, including 400 million middle-class consumers. This number is expected to reach 800 million in the next decade, which will bring more imports of goods and services to the PRC,” he said.

The value added to the economy of the PRC’s green industry is about RMB12.5 trillion (about $1.8 trillion), up by 11.6% year on year and contributing to 21.5% of economic growth, he said.

The recently released 15th Five-Year Plan includes 20 major targets, eight of which are binding. Among these eight, five are green and low-carbon development targets. These tough targets demonstrate PRC’s firm commitment to a green transition and building a Beautiful China. At the same time, digitalization is making traditional industries more efficient.

Meanwhile, technological innovation is paving the way for transformation. He mentioned that PRC is accelerating the implementation of its innovation‑driven development strategy, with total factor productivity maintaining steady growth.

Mr. Liao underscored that, as the world’s second‑largest economy, the PRC generates significant economic spillovers. He reaffirmed that PRC would remain focused on managing its own affairs well while continuing to advance high‑level opening‑up, thereby injecting greater certainty and stability into the global economy.

“The four major initiatives on development, security, civilization, and global governance, along with the vision of a community with a shared future for mankind proposed by President Xi Jinping, clearly illustrate PRC’s approach to international engagement, including our cooperation with ADB and its members—past, present, and future,” Mr. Liao concluded.

Greater Mekong Subregion Economic Cooperation Program: Developing a More Integrated, Prosperous, Sustainable, and Inclusive Subregion

ADB, Luli Wood Sign Green Loan to Advance Circular Economy in PRC’s Forestry Value Chain

BEIJING, PEOPLE’S REPUBLIC OF CHINA (4 December 2025) — The Asian Development Bank (ADB) and Shouguang Luli Wood Inc. (Luli Wood) have signed a $50 million green loan (about CNY353.63 million) to support the construction of an oriented strand board (OSB) factory, associated facilities, and a captive biomass power plant, as well as to finance working capital needs in Jiangxi Province, the People’s Republic of China (PRC).

“Climate stability and healthy natural ecosystems are fundamental global public goods, and this project is a tangible example of how the private sector can be catalyzed to actively safeguard them,” said ADB Country Director for PRC Asif Cheema. “By championing a circular bioeconomy, we are not only reducing emissions and preserving forests but also setting a new benchmark for the forestry sector—demonstrating that commercial viability and environmental stewardship are mutually reinforcing.”

The supply of wood and raw materials in the PRC faces significant challenges, with only 1% of forests certified as sustainably managed. This is compounded by the heavy reliance on imported wood, which accounts for over half of the PRC’s demand. The wood panel market is dominated by plywood, which typically depends on large timbers, encouraging the logging of old and natural forests and the inefficient use of trees.

Luli Wood’s OSB production addresses these challenges. OSB is an engineered wood panel that does not use old-growth timber. It uses wood waste—such as branches and twigs—and small trees sourced from smallholder farmers, with about 10% of the inputs being fast-growing and sustainable bamboo. The waste generated from the OSB production is used as fuel by a biomass power plant, which generates the electricity and steam required to operate the factory.

ADB’s financing is verified as a green loan by ERM, a second-party opinion provider, in accordance with the Green Loan Principles.

The project is expected to reduce greenhouse gas emissions by around 200,000 tons of carbon dioxide annually, create 1,500 jobs, and provide additional income for thousands of smallholder wood suppliers. The project also incorporates a gender action plan that will increase women’s inclusion across Luli Wood’s value chain, operations, and workplace.

“Partnering with ADB is a powerful endorsement of our vision,” said Luli Group Vice Chairman Xue Mingliang. “We have built a fully integrated, green supply chain—from sustainable forestry to finished homes—and are committed to setting a new standard for the industry. This collaboration is a pivotal step in our journey to becoming an international company in sustainable wood processing.”

Established in 2001, Luli Wood is a subsidiary of the diversified Luli Group and one of the largest OSB producers in the PRC. The company holds chain-of-custody certifications from both the Forest Stewardship Council (FSC) and the Programme for the Endorsement of Forest Certification (PEFC). These certifications ensure traceability and responsible sourcing from forest to finished product, validating that raw materials originate from certified forests or recycled materials. Luli Group is ranked among the top 500 private companies in the PRC.

ADB is a leading multilateral development bank supporting inclusive, resilient, and sustainable growth across Asia and the Pacific. Working with its members and partners to solve complex challenges together, ADB harnesses innovative financial tools and strategic partnerships to transform lives, build quality infrastructure, and safeguard our planet. Founded in 1966, ADB is owned by 69 members—50 from the region.

Reproduced from ADB.org.

Fiscal Rules: Observations from Europe for the People’s Republic of China

ADB Supports Green Port and Shipping Development in Anhui Province, PRC

BEIJING, PEOPLE’S REPUBLIC OF CHINA (1 December 2025) — The Asian Development Bank (ADB) has approved a loan of CNY755.64 million ($106.05 million equivalent) to support the development of green, smart, and resilient inland river ports and clean-energy shipping in Anhui Province of the People’s Republic of China (PRC).

The Anhui Province Green Port and Shipping Demonstration Project will help transform the local port and shipping sector into a more sustainable and digitally advanced model. The project aims to reduce greenhouse gas emissions, enhance resilience to extreme weather events, and strengthen logistics connectivity to support inclusive and sustainable economic growth. It will directly benefit an estimated 1.17 million residents—including women, low-income groups, and persons with disabilities—through improved transport efficiency, reduced logistics costs, and increased employment opportunities.

“This project demonstrates the powerful impact of integrating low-carbon transport with smart and green port development,” said ADB Country Director for the PRC Asif Cheema. “Aligned with both the country’s goal for high-quality, low-carbon development and ADB’s country partnership strategy for the PRC, 2021–2025, the project will contribute to regional and global public goods, including reduced greenhouse gas emissions and more sustainable logistics systems.”

Anhui’s rapid industrial growth, including its booming electric vehicle sector, has boosted freight demand. However, inland waterways and ports face capacity constraints, diesel vessel dominance, and climate hazards—such as flooding and extreme storms—that threaten service continuity. These challenges increase logistics costs, raise emissions, and heighten the vulnerability of riverside communities.

To address these issues, the project will construct green and climate-resilient inland river ports equipped with energy-efficient loading facilities, smart port operation systems, and robust flood protection mechanisms. Clean-fuel container vessels will replace diesel-powered ships and pilot green shipping routes connecting key logistics hubs. The project will enhance emergency preparedness and promote gender-inclusive employment in port operations, with women expected to fill at least 15% of skilled positions.

The project will further strengthen institutional capacity through studies on expanding the use of clean and alternative fuels. It will develop green and smart port management guidelines and deliver targeted training on climate resilience and sustainable finance. It will also share knowledge generated with other provinces and ADB developing member countries to promote low-carbon inland waterway transport and green port development.

Reproduced from ADB.org.

Improving Kazakhstan and Kyrgyz Republic’s Cross-Border Trade with the People’s Republic of China

Overview

Trade between Kazakhstan, Kyrgyz Republic, and the People’s Republic of China (PRC) has traditionally been viewed through the lens of high-level agreements and major industries. However, a closer look highlights the crucial role of small and medium-sized enterprises (SMEs) as the driving force behind this trade.

While traditional cross-border commerce remains dominant, the growth of e-commerce has introduced both opportunities and challenges for SMEs. Given their substantial contributions to gross domestic product—36.5% in Kazakhstan and 43.3% in Kyrgyz Republic—these businesses are well-positioned to capitalize on expanding trade with the PRC. As a global leader in cross-border e-commerce, PRC has significantly influenced these evolving trade dynamics.

A study published by the Central Asia Regional Economic Cooperation (CAREC)^[1] Institute analyzes the key drivers of trade between Kazakhstan, Kyrgyz Republic, and the PRC from the perspective of businesspeople. Special attention is given to the role of the Xinjiang Uyghur Autonomous Region in this trade, considering its historical, cultural, religious, and ethnic ties with Kazakhstan and Kyrgyz Republic.

Trade Strategies with PRC

Qualitative interviews with entrepreneurs from Kazakhstan and Kyrgyz Republic involved in cross-border trade with the PRC revealed that Central Asian companies use five strategies in their trade with the PRC:

Direct trade with Xinjiang: Given its geographical proximity and established trade infrastructure, Xinjiang serves as a key hub for direct trade. In addition, many of Kazakhstan and Kyrgyz Republic’s businesspeople have relatives in Xinjiang who assist in sourcing Chinese commodities and coordinate the smooth transfer of goods. These companies frequently engage in cross-border transactions with Xinjiang-based suppliers and distributors, leveraging cultural, regional and economical possibilities. Kazakhstani citizens can also travel visa-free to the PRC for 30 days, so they visit Xinjiang anytime to find suppliers, contacts, etc.
Direct trade with southern PRC regions: Some companies extend their trade networks to southern PRC, particularly Guangdong and Zhejiang provinces, which are known for manufacturing hubs and export-oriented industries. They also do business in Guangzhou and Shanghai. This strategy allows access to a broader range of products, factories, and competitive pricing, though it often requires more logistical coordination and higher transportation costs.
Orders from Chinese marketplaces: Electronic commerce platforms have become increasingly popular among Central Asian SMEs. These marketplaces enable businesses to source goods directly from Chinese manufacturers and wholesalers, often at lower costs. However, this strategy requires familiarity with digital tools, knowledge of the Chinese language, and reliable payment and logistics solutions.
Repurchase from local companies: Some businesses opt to source Chinese goods indirectly by purchasing from local intermediaries or distributors, who have already imported products from the PRC at a low price and in large quantities. Small shops that sell clothes, footwear, fabrics, and other items purchase commodities from local warehouses. This reduces the complexity of cross-border trade but may result in higher costs due to added margins.
Utilization of the Khorgos Free Economic Zone (FEZ): The Khorgos FEZ, located on the Kazakhstan–PRC border, serves as a critical trade and logistics hub. SMEs use the economic zone to streamline customs procedures, reduce tariffs, and facilitate the storage and re-export of goods. SMEs purchase commodities at a cheaper price and re-sell on the local market and/or trade centers. This strategy is advantageous for businesses looking to minimize costs and enhance efficiency in cross-border trade.

The adoption of these strategies depends on the company’s size, industry, and access to resources. Larger firms with greater financial and logistical capabilities are more likely to diversify their approaches to maximize their competitive advantage by combining direct trade with factories and e-commerce. In contrast, smaller SMEs may focus on one or two strategies due to resource constraints, often relying on intermediaries or localized trade networks. This strategic diversity highlights the adaptability of Central Asian businesses in navigating the complexities of trade with the PRC.

Challenges

Lack of interest in factories. Businesses in Kazakhstan and Kyrgyz Republic show little interest in Urumqi’s (northwestern PRC) factories, which produce limited goods. Entrepreneurs who come to Urumqi deal with companies’ representatives operating from warehouses near wholesale bazaars. The product range presented by these companies is usually limited and delivered to Urumqi at a higher price. For Central Asian entrepreneurs who have only started doing their businesses in Urumqi, local representatives (local Uyghurs, Kazakhs, and Kyrgyz, known as pomogaiki) provide services such as supplier searches, translation, and negotiations, and charge 100–200 yuan per day or take a 20% commission on purchases.

High markups. Majority of goods delivered to Central Asian markets from the PRC, have a substantial markup, several times higher than the original price charged by the supplier. For example, fabrics at Madina Bazaar in Kyrgyz Republic’s capital, Bishkek, pass through multiple resale stages. This supply chain can involve 5–7 markups. Re-branding and reselling are common not just in textiles but also in other sectors, including equipment, home products, and furniture.

Regulatory barriers. Despite efforts to export local products to the PRC, stringent certification, licensing, and laboratory requirements remain as major obstacles. Attempts of companies in Kyrgyz Republic to sell camel milk, nuts, dried fruits, and licorice on an e-commerce platform have largely been unsuccessful due to certification challenges and unmet volume requirements.

Need for intermediaries. To ensure quality of goods, Central Asian businesses hire intermediaries in the PRC to negotiate and inspect orders, with fees reaching up to 20% of the contract value. Finding reliable intermediaries can be challenging due to market competition and the risk of fraud.

High order volumes. Working with businesses in southern PRC regions is feasible mainly for medium and large enterprises due to high financial commitments, with fabrics are sold in wholesale quantities, far beyond most Kyrgyz Republic producers’ needs. Kyrgyz manufacturers prefer smaller purchases to test the market, avoiding the risk of unsold inventory.

Opportunities

Affordability for SMEs. Trade with Xinjiang is well suited for small-scale businesses. Kyrgyz Republic’s shop owners use industry contacts to send images of needed goods via an app; negotiate prices, quantities, and delivery dates with Urumqi suppliers; and arrange shipments. Transactions are fast and convenient, allowing them to order small quantities to test market demand. If demand grows and funds are available, they can explore other sourcing and delivery channels.

PRC–Kyrgyzstan-Uzbekistan railway. Kyrgyz Republic’s business sector is optimistic about the PRC–Kyrgyz Republic–Uzbekistan railway, especially as it passes through Torugart, a key border crossing. Located near this crossing, Naryn’s Free Economic Zone offers significant opportunities and has the potential to become a logistics and trade hub similar to Khorgos. This would enable businesses to buy Chinese goods and resell them locally at higher profits.

Unlike Khorgos, which is unpopular due to poor infrastructure and unfavorable and unprofitable conditions, Naryn’s duty-free zone is expected to be well received, boosting regional development. Kashgar’s Free Trade Zone in Xinjiang will supply goods like fabrics and fittings, reducing logistics costs and enhancing cooperation. However, development of the railway and Naryn’s FEZ may divert to Kazakhstan trade routes currently passing through Khorgos in Kyrgyz Republic.

Installment payments. Paying sellers in Xinjiang in installments makes it convenient for buyers in Kazakhstan and Kyrgyz Republic to do business. Most transactions occur informally through local intermediaries, who confirm payments with Chinese partners.

Positioning beyond trade. Enhancing Khorgos’ appeal as a shopping and sightseeing destination could attract more visitors and diversify revenue streams. Positioning the free economic zone as a regional trade and cultural exchange hub could strengthen its importance in Central Asia.

Policy Recommendations

The proposed policy actions may guide policymakers, trade facilitators, and business stakeholders seeking to improve the cross-border trade of Kazakhstan and Kyrgyz Republic with the PRC.

Introduce a visa-free regime. Kyrgyz Republic and the PRC can negotiate bilateral agreements to facilitate the travel of citizens between these countries.
Improve trade and E- commerce data collection and accessibility. National statistics authorities can publish standardized country-level cross-border trade and e-commerce trade statistics regularly.
Raise business awareness. Business and regional trade associations can organize trade forums and workshops and create online platforms and guidebooks to highlight trade regulations, procedures, and opportunities in the PRC, specifically in the Xinjiang region.
Foster SME participation in global online marketplaces. Relevant government offices can provide training and certification for SMEs to meet Chinese and international e-commerce standards. They can also invest in high-speed internet and mobile connectivity, as well as develop clear and supportive legal frameworks for e-commerce.
Simplify trade and customs procedures. Relevant government offices can harmonize procedures with the PRC by aligning customs regulations and standards, and reduce complexity in tax regulations for cross-border trade, especially for SMEs. They can also create digital platforms for real-time foreign exchange transactions and hedging services.

While challenges, such as regulatory barriers, logistical bottlenecks, and competition persist, opportunities arising from regional integration, e-commerce, and infrastructure development offer significant potential for growth for Kazakhstan and Kyrgyz Republic’s cross-border trade with the PRC.

Zalina Enikeeva

Research Fellow, Institute of Public Policy and Administration, University of Central Asia

This article was first published on Development Asia.

Disclaimer: The views expressed in this article are those of the authors and do not necessarily reflect the views of the Asian Development Bank, its management, its Board of Directors, or its members.

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Tag: Economics