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Jane Cai

Beijing has set a relatively cautious yet pragmatic economic growth target for 2026 amid persistent domestic headwinds and escalating external pressures.
A 4.5 to 5 per cent GDP growth target – the lowest since 1991 – was announced by Premier Li Qiang on Thursday at the opening session of the National People’s Congress (NPC), China’s top legislature.
In delivering his annual government work report, Li reaffirmed Beijing’s aim for stronger economic growth where conditions allowed.
He emphasised that it would “strive for better results in practice” to align with the goal of doubling the 2020 per capita gross domestic product and realising medium- to long-term economic potential.
The world’s second-largest economy expanded by 5 per cent last year, meeting the “around 5 per cent” official target amid a tariff war with the United States and a property market downturn at home.
The new growth target matches an earlier report by the South China Morning Post, which forecast that the GDP goal would prioritise space for structural reforms, risk management and high-quality development, rather than aggressive stimulus-driven expansion.


Shen Danyang, director of the State Council Research Office and head of the government work report drafting group, said Beijing wanted to “reach for higher goals while maintaining a stable pace”.
“This year, China’s external economic environment has become even more complex and volatile. The number of unpredictable factors in economic operations is likely to exceed expectations,” he told a media briefing after the opening of the NPC’s annual session.
“Setting such a range-based growth target [aims] precisely to retain flexibility in responding to these uncertainties,” Shen said. “Everyone has seen the recent developments in the international situation.”
The government work report, drafted before the Middle East turmoil erupted, mainly addresses China’s frictions with the US-led West, including tariff hikes and other trade restrictions.
In his report, Li highlighted the external and internal challenges faced by China in 2025, describing them as rarely encountered in many years.
“Rarely in many years have we encountered such a grave and complex landscape, where external shocks and challenges were intertwined with domestic difficulties and tough policy choices,” Li said.
The external threats he highlighted included unilateralism, protectionism, market volatility and mounting pressures on foreign trade.




Domestically, the economy remained in transition, Li said, citing deep-seated structural problems, with domestic consumption and investment falling short of the required growth momentum.
Thursday’s work report notably broke with precedent by explicitly mentioning the United States, with US President Donald Trump’s visit to China just weeks away.
Previous reports by Chinese premiers have rarely made direct reference to any other country.
“Positive outcomes were produced by the five rounds of China-US trade talks and important common understandings were reached by the two countries’ heads of state during their meeting in Busan [South Korea], putting China-US economic and trade cooperation on a more stable footing,” the report said.
Justin Lin Yifu, dean of the Institute of New Structural Economics at Peking University and a former chief economist at the World Bank, said: “The trade war certainly has an impact [on the Chinese economy], but judging from our performance last year, we are well-prepared.”
“We can utilise our large domestic market, complete industrial structure and the resilience of our supply chain … China is a large economy. We are a large ship.
“By doing a good job with our industry, no matter the situation, we can sail forward against the wind and waves,” Lin, a member of China’s top political advisory body, said on the sidelines of the NPC opening ceremony.
However, a National Development and Reform Commission report – also released on Thursday – identified several internal bottlenecks constraining economic growth.


These include the arduous task of shifting to an innovation-driven growth model, persistent demand weakness, chronically low market confidence and operational difficulties for many enterprises, according to the top economic planning agency.
Further constraints include heightened employment and income challenges for households, fiscal imbalances in some local governments and the continued downturn in the real-estate market.
To counter these challenges, China’s strategy centres on doubling down on science and technology as the core driver of productivity, integrating sci-tech development with advanced manufacturing.
The strategy also involves nurturing emerging and future industries – such as integrated circuits, aerospace and biomedicine – along with building smart factories and intelligent supply chains, and strengthening quality supervision and brand building.
Efforts are also focused on expanding markets and boosting domestic demand through measures such as large-scale equipment renewal and optimising traditional industries, as well as mitigating risks stemming from local government debts and troubled small and medium-sized financial institutions.
Stability remains paramount, with the reports emphasising the safeguarding of grain and energy security.
In another noteworthy shift, Li elevated “investment in people” to equal footing with traditional outlays on physical assets such as infrastructure, hardware and industrial capacity.
Such investment involves bolstering human capital and social welfare – through pension boosts, parenting support, environmental improvements and public service upgrades – to protect against external shocks and sustain social stability.




Government spending priorities, as reflected in the finance ministry’s budget report released alongside Li’s work report, lean towards boosting productivity through science and technology, with a 10 per cent year-on-year funding increase budgeted for the sector this year.
The second fiscal priority is diplomacy, with a budgeted 9.3 per cent spending increase – the highest in three years and versus 8.4 per cent last year – as Beijing positions itself as a global stabiliser and pursues greater international influence.
Next come grain, oil, and other essential reserves – with an 8.1 per cent increase in budgets.
National defence spending is budgeted to grow by 7 per cent this year, a marginal decrease from the 7.2 per cent of the past three years, as China bolsters resilience amid external turbulence.
Li said the Chinese military had made some “new achievements” in modernising last year, and pledged “solid gains in military training and combat readiness” this year while accelerating “the development of advanced combat capabilities”.
On Taiwan, a major geopolitical flashpoint and a red line for Beijing, Li said the central government would insist on the one-China principle and the 1992 consensus.
He also said Beijing would “resolutely crack down on separatist activities”. It was much stronger wording than in last year’s work report, when he only said the central government would “oppose” them.


Louis Kuijs, Asia-Pacific chief economist with S&P Global Ratings, said that China’s leaders acknowledged the downward pressure on organic growth in recent years.
“Their key objectives are medium-term ones, notably modernising industry and boosting scientific and technological innovation,” he said.
“Accepting more modest growth reduces the need for the kind of debt-fuelled short-term stimulus that is nowadays looked upon less favourably in Beijing.”
China on Thursday also released the draft outline for its 15th five-year plan, covering 2026 to 2030.
It is a comprehensive road map that places scientific and technological breakthroughs – particularly deep integration of artificial intelligence – at the core of China’s economic strategy and national security priorities amid intensifying US rivalry.
The plan bets heavily on technology-led growth, rather than consumption stimulus, to drive the next development phase, despite structural headwinds such as an ageing population, debt pressures and supply-demand imbalances.
The core objectives embody President Xi Jinping’s emphasis on cultivating “new quality productive forces” – a concept that prioritises innovation-driven productivity to overcome the middle-income trap, mitigate population decline and achieve greater self-reliance in critical technologies.
Additional reporting by Ji Siqi


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Beijing to prioritise hi-tech over stimulus-driven growth with focus on the people in notable shift, premier’s work report to NPC reveals


Beijing to prioritise hi-tech over stimulus-driven growth with focus on the people in notable shift, premier’s work report to NPC reveals.


China targets lowest growth range since 1991 in realistic move as pressures rise

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Beijing to prioritise hi-tech over stimulus-driven growth with focus on the people in notable shift, premier’s work report to NPC reveals

Beijing to prioritise hi-tech over stimulus-driven growth with focus on the people in notable shift, premier’s work report to NPC reveals