China has signalled continuity rather than a dramatic shift in economic policy, setting a slightly lower growth target for 2026 as the country grapples with a prolonged property slump, weak domestic demand and rising geopolitical tensions.
Delivering the government’s annual work report at the opening session of the National People’s Congress, Premier Li Qiang announced that the world’s second-largest economy would aim for annual growth of between 4.5 per cent and 5 per cent this year.
The target is slightly below China’s 5 per cent growth recorded last year and lower than the roughly 5 per cent targets set in the previous three years, making it the lowest official growth goal since 1991.
“While recognising our achievements, we are also clear-eyed about the difficulties and challenges we face,” Li said while reading much of the 35-page report during his more than hour-long address to nearly 3,000 delegates.
According to the report, Beijing is attempting to balance two key objectives: reviving the slowing economy by boosting domestic spending, while also pushing forward the strategic ambitions of Chinese leader Xi Jinping to transform the country into a global technological powerhouse.
The government is investing heavily in areas such as artificial intelligence, robotics and other advanced technologies while seeking to reduce dependence on the United States and other countries for high-end semiconductors and critical components.
In line with its policy approach in recent years, the report indicated that the government will continue to support domestic demand but is unlikely to roll out any sweeping stimulus measures to accelerate growth.
“Beijing continues to prioritize strengthening industrial self-reliance over boosting household consumption,” said Neil Thomas.
In its draft budget for 2026, the government also trimmed the annual increase in defence spending to 7 per cent, slightly lower than the 7.2 per cent rises recorded in recent years.
The National People’s Congress — a largely ceremonial legislature that typically endorses decisions made by the ruling Communist Party — is expected to approve the government’s annual report and budget at its closing session next week. Delegates will also consider a new five-year plan outlining policy priorities through 2030.
China’s economic outlook is being complicated by mounting external pressures, including trade tensions and conflicts affecting global energy markets.
Like many Asian economies, China relies heavily on oil and natural gas imports from the Middle East, and ongoing conflict in the region has raised prices and threatened supply stability.
The government report warned that global trade conditions are deteriorating amid rising geopolitical tensions.
It also acknowledged structural challenges at home, pointing to an “acute” imbalance between strong manufacturing supply and weak consumer demand, as well as the difficulty of transitioning to new drivers of economic growth.
“Rarely in many years have we encountered such a grave and complex landscape, where external shocks and challenges were intertwined with numerous domestic difficulties and tough choices,” Li said.
Boluwatife Enome
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