China has set its lowest annual economic growth target since 1991, acknowledging the adverse impact of the global climate and the challenges faced by Chinese people in finding jobs and improving their incomes.
The target for 2026 of between 4.5-5 per cent follows last year’s “around 5 per cent” and is far below the double-digit growth targets that were routine up to about a decade ago.
Premier Li Qiang announced the growth target at the opening of the Two Sessions, the annual meetings of China’s legislature, the National People’s Congress and the advisory Chinese People’s Political Consultative Conference.
Xi Jinping sat alongside Li at the event in the Great Hall of the People on Tiananmen Square, the first of a series of sessions that will see the adoption of the 15th five-year plan setting out China’s economic, social and political blueprint up to 2031.
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“While recognising our achievements, we are also clear-eyed about the difficulties and challenges we face. The evolving external environment is exerting a greater impact on China, and geopolitical risks are rising. Global economic momentum remains sluggish, while multilateralism and free trade are under severe threat,” Li said.
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“At home, we still face quite a few problems and challenges, both old and new, in economic development and transformation. The task of transitioning to new growth drivers is formidable, the imbalance between strong supply and weak demand is acute, market expectations are weak, and there are many risks and hidden dangers in key areas.
“Some enterprises are facing difficulties in their operations, and it is more challenging for people to secure employment and earn more. Some local governments are burdened by severe budgetary imbalances, and the real estate market remains in a period of adjustment. There are still many weak links in public services.”
Li said the fiscal deficit target would be 4 per cent, the second successive year when it will be above Beijing’s preferred figure of 3 per cent. The inflation target of 2 per cent will be a challenge to achieve as deflationary pressures have left prices flat or falling.
Li said the Government would nurture industries of the future such as future energy, quantum technology, embodied AI, brain computer interfaces and 6G technology.
China will increase spending on science and technology by 10 per cent and state-owned enterprises will be encouraged to take the lead in helping new pillar industries such as integrated circuits, aerospace, biomedicine and the low-altitude economy.
Li made a nod to the concerns expressed by the European Union and others about their trading relationships with China, promising to boost imports to promote balanced trade. And he said Beijing was ready to advance negotiations on more regional and bilateral trade and investment agreements.
There was no direct reference to the war in Iran, which has the potential to hurt China’s economy by driving up energy prices and disrupting trade flows. But Li indicated that it has not interrupted the improvement of relations with the United States after Xi faced down Donald Trump, who is due to visit China later this month, over tariffs.
“We took a reasoned, robust, and effective approach to addressing economic and trade issues and stood firm in safeguarding China’s national interests. 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, putting China-US economic and trade co-operation on a more stable footing,” he said.
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