China Sets 4.5–5% Growth Target Amid Economic Challenges

China has announced a new economic growth target of 4.5% to 5% for 2026, slightly lower than previous years as the country deals with a property market slump, weak domestic demand and rising global uncertainty.

Chinese Premier Li Qiang revealed the target during his report at the opening session of the National People's Congress, the country’s annual parliamentary meeting.

China’s economy grew 5% in 2025, while the government had set similar targets in recent years. The new range is considered the lowest official growth target since 1991, showing a cautious approach amid economic pressures.

Focus shifting to “high-quality development”

According to experts, China is now focusing less on rapid growth and more on what leaders call high-quality development. This strategy aims to improve technology, productivity and long-term economic stability rather than relying only on fast GDP expansion.

China’s leadership under Xi Jinping wants to transform the country into a global leader in artificial intelligence, robotics and advanced technology. The government is also trying to reduce dependence on foreign countries, especially the United States, for high-end semiconductors and key technology components.

Economic challenges at home and abroad

China’s government acknowledged that the country faces a “grave and complex landscape”.

Several issues are affecting the economy, including:

• A prolonged property market slowdown

• Weak consumer spending

• Rising geopolitical tensions

• Trade disputes and tariffs with the United States

• Higher energy prices due to conflicts in the Middle East

The report also highlighted an imbalance between strong manufacturing supply and weak consumer demand, which has created additional pressure on economic growth.

Government plans to boost consumption

China has relied heavily on exports to maintain growth. In fact, the country recorded a trade surplus of nearly $1.2 trillion in 2025, though exports to the U.S. declined after tariffs were raised by Donald Trump.

To stimulate domestic demand, the government plans several measures. These include issuing 250 billion yuan ($36 billion) in bonds to provide rebates to consumers who trade in old cars and appliances for new ones.

Local governments will also introduce city-specific housing policies to reduce unsold properties and stabilize the real estate market.

However, experts say that increasing consumer spending will take time. Many Chinese households are saving money because of job uncertainty and falling property prices.

Defence spending and military reforms

China’s draft budget also proposes a 7% increase in defence spending, slightly lower than the 7.2% rise in previous years. The total defence budget would reach around 1.9 trillion yuan ($270 billion).

The spending increase comes as China continues a major anti-corruption campaign within its military. Several senior military officials have been removed, including delegates from the National People’s Congress.

Analysts believe these actions aim to modernize the military and strengthen the ruling Communist Party’s control over the armed forces.

Long-term economic outlook

Despite the current economic slowdown, China’s leadership remains focused on building a stronger and more technologically advanced economy. Officials say boosting domestic consumption and improving social welfare will be key to maintaining sustainable growth in the coming years.

However, economists believe that reviving consumer confidence and stabilizing the property sector will be crucial for China’s long-term economic recovery.