China Sets Modest 4.5%-5% Growth Target Amid Economic Headwinds
BEIJING — China announced its lowest economic growth target in decades on Thursday, signaling a cautious approach as the world’s second-largest economy navigates a complex landscape of domestic challenges and global uncertainties. The country aims for a gross domestic product (GDP) growth of 4.5% to 5% in 2026, Premier Li Qiang stated during the opening session of the National People’s Congress (NPC).
This target, the lowest since 1991, follows a 5% growth rate achieved in 2025 and marks the first formal downgrade since 2023 . Li acknowledged the difficulties facing the nation, stating, “While recognizing our achievements, we are also clear-eyed about the difficulties and challenges we face,” during his address in the Great Hall of the People .
The NPC, China’s largest political event of the year, brings together thousands of delegates to set economic targets and outline policy priorities under the leadership of Xi Jinping . The event is known for its tightly controlled nature and emphasis on stability.
Navigating Global Challenges and Trade Relations
The announcement comes as China prepares for a visit from President Donald Trump later this month, where both leaders are expected to discuss the fragile state of U.S.-China trade relations. The situation is further complicated by recent U.S.-Israeli strikes on Iran, a key partner of China .
China is focused on rebalancing its economy away from reliance on exports and towards boosting domestic demand. Key challenges include a struggling property sector, industrial overcapacity, and mounting local government debt. The nation is also heavily investing in advanced technologies like artificial intelligence and robotics to compete with the U.S. For global leadership .
Li indicated the government will implement policies to counter U.S. Tariffs, which have impacted Chinese exports. Despite these tariffs, China achieved a record trade surplus of nearly $1.2 trillion last year .
Military Modernization and Regional Security
Defense spending is set to increase by 7% to over $275 billion, a slight decrease from the previous year’s 7.2% rise . This increase supports China’s goal of modernizing its military by 2035 amid rising regional tensions, particularly concerning Taiwan, which Beijing claims as its own . Li emphasized the commitment to “develop solid gains in military training and combat readiness and speed up the development of advanced combat capabilities” .
Addressing Demographic Shifts
China is also grappling with a rapidly aging population and declining birth rates. The government plans to create a “childbirth-friendly society” over the next five years, with improvements to education and healthcare . Officials recognize the need to address concerns about the high cost of raising children and limited job opportunities for young people.
the government aims to enhance services for the elderly, focusing on expanding sports programs and increasing the availability of eldercare facilities, as over one-fifth of the population is now over the age of 60 .
Premier Li Qiang is the current premier of China, assuming office in March 2023 .