China sets lowest growth target in decades
China set its annual growth target at 4.5 percent on Thursday, its lowest figure in decades, but at the center of plans to tackle sluggish consumption and a flagging property market.
Beijing also used its showpiece annual political gathering to announce a 7-percent increase in its defense budget, the second largest in the world, in line with previous years as it looks to counter the United States and enforce its claims over Taiwan and the South China Sea.
China is the world’s second-largest economy and accounts for a third of global growth, but it faces serious structural imbalances and US trade pressures despite sustaining strong exports.
“The achievements of the past year were hard-won,” Premier Li Qiang said, as he opened the annual meeting of the National People’s Congress (NPC), China’s parliament, on Thursday morning.
“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.”
This year’s growth target is the lowest since 1991, according to Agence France-Presse (AFP) research.
The only exception was in 2020, when none was set as the economy reeled from the Covid-19 pandemic.
Delegates from across China gathered in the cavernous Great Hall of the People for a series of highly orchestrated meetings in Beijing known as the Two Sessions, overseen by President Xi Jinping.
Focus on quality growth
They will approve bills and reforms that have largely already been decided by Xi and the ruling Chinese Communist Party (CCP) during a week of political theater in the capital.
The CCP has said repeatedly that China’s economic growth model must shift away from traditional drivers, such as exports and manufacturing, and toward consumption.
Other “main projected targets for development” in 2026 include an increase in the consumer price index of around 2 percent and “growth in residents’ income in step with economic growth,” according to the report delivered by Li.
China’s economic expansion has been slowing for years as the economy matures.
The government has said its focus is now on “high-quality” growth through upgrading industry, investing in new technologies and pursuing green development.
Strong exports drove the economy to expand 5 percent in 2025, with the trade surplus hitting a record $1.2 trillion, despite a monthslong trade war with the United States.
The public budget is set to reach 30.01 trillion yuan_an increase of 4.4 percent over last year.
Beijing is investing heavily in high-tech industries, such as semiconductors and artificial intelligence, to reduce its reliance on the United States.
