The Asian Development Bank raised its growth forecast for China on Friday, citing continued strength in exports and high-tech investment as key drivers of economic momentum.

The Manila-based multilateral development bank now expects China's economy to expand 4.6 percent in 2026, up from its previous projection of 4.3 percent, before easing slightly to 4.5 percent in 2027.

The world's second-largest economy grew by 5 percent in 2025, supported by robust exports and resilient industrial activity. Exports and government investment in strategic and high-tech sectors are projected to remain key near-term growth drivers, helping to offset subdued consumer spending and uncertainty in global markets amid tensions in the Middle East, the April 2026 edition of the ADB's flagship report said.

"Exports, investment in advanced manufacturing and services are expected to continue supporting growth, but reviving household consumption will be critical for sustaining momentum," Asif S. Cheema, ADB's country director for China, said.

He added that policies aimed at improving income prospects, strengthening social protection, and boosting consumer confidence will be essential to support domestic consumption, while the macroeconomic impact of the Middle East conflict warrants close monitoring.

China's 15th Five-Year Plan (2026-30) places high-tech manufacturing and industrial upgrading at the center of long-term growth, with coordinated support for strategic and advanced sectors expected to sustain competitiveness in high-value exports in the coming years. At the same time, stronger import demand linked to high technology investment — particularly in areas such as semiconductors — is likely to drive a modest pickup in import growth compared with 2025, the report said.

Policy efforts to support demand — including higher social welfare spending, consumption incentives, and labor market stabilization — are also expected to gradually rebuild consumer confidence, paving the way for firmer consumption growth in 2027, as these measures take effect.

The Asian Development Bank said that Chinese government consumption is likely to remain resilient over the next two years, reflecting policymakers' continued focus on boosting domestic demand.

The labor market is also expected to remain broadly stable through 2026 and 2027, underpinned by continued expansion in advanced manufacturing and modern services. Recruitment data points to strong hiring demand in sectors such as robotics, defense, and artificial intelligence, as well as in service sectors like gaming, pet care, and online-to-offline lifestyle services — a trend likely to persist in the next two years, the report said.

Inflation, meanwhile, is forecast to edge up to 0.6 percent in 2026 and 1 percent in 2027, from 0 percent in 2025, driven by higher food costs, policy efforts to curb excessive competition, and rising global energy prices driven by the Middle East conflict, the ADB said.

Fiscal policy is expected to remain supportive, with a stronger focus on social spending, while monetary policy is likely to stay accommodative to bolster growth, particularly in services consumption and strategic sectors.

The bank also cautioned that downside risks to the outlook have intensified, noting that a prolonged conflict in the Middle East has become an increasingly likely scenario.

jiangxueqing@chinadaily.com.cn