Facing ‘grave and complex landscape,’ China sets lowest economic growth target in decades

Facing ‘grave and complex landscape,’ China sets lowest economic growth target in decades

China’s National People’s Congress (NPC) announced a subdued GDP growth projection for 2026, marking the weakest ambition in over 30 years. The target of 4.5-5% expansion reflects the nation’s struggle with stagnant internal demand and a shifting global environment. This cautious outlook follows three consecutive years where the government aimed for “around 5%” growth, which it managed to achieve despite the lingering effects of pandemic restrictions and U.S. trade tariffs.

Domestic and international challenges have combined to slow China’s economic momentum. A prolonged property market downturn, reduced investment, sluggish consumer activity, and deflationary pressures have contributed to a flattening growth trend. Premier Li Qiang, the nation’s second-highest leader, acknowledged these difficulties during the NPC’s opening session, describing the economic climate as “grave and complex.” He noted that the economy had shown resilience amid obstacles but faced deep structural issues.

“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,” said Li Qiang, emphasizing the need for strategic adjustments.

The NPC meeting, which will span a week, will see nearly 2,900 delegates finalize the next phase of China’s Five-Year Plan. This policy framework is designed to steer the country toward becoming a dominant force in global technology. The session coincides with preparations for Trump’s visit to Beijing, where a three-day summit with Xi Jinping will address trade, technology, and geopolitical concerns like Taiwan.

China’s economic rise began with reforms in the late 1970s, leading to nearly three decades of robust growth. It surpassed Japan as the world’s second-largest economy in 2010, but recent years have seen a slowdown, partly due to pandemic policies. Meanwhile, India has emerged as the fastest-growing major economy, outpacing China in certain areas.

As Xi Jinping prepares to meet Trump for the first time since 2017, the Chinese leader’s resilience has been bolstered by strategic responses to U.S. trade actions. By imposing tariffs on American imports and controlling rare earth exports, China maintained a record trade surplus despite external pressures. The recent U.S. Supreme Court decision limiting Trump’s tariff authority further supports this approach, reducing the burden on Chinese goods.

Internally, the government has recognized the need for a shift in economic strategy. While the 2025 “around 5%” goal was met, only half of the provinces reached their individual targets. Helen Chiao, Bank of America’s chief Greater China economist, noted that the revised target highlights a move toward prioritizing quality over speed in growth. “It’s also a reflection… that policymakers might be acknowledging the fact that the domestic demand weakness is probably going to be challenging to remove,” she explained.

For the first time in three decades, investment in key sectors like housing, manufacturing, and infrastructure declined last year. This trend underscores the ongoing crisis in the property market, where sales and capital inflows have continued to fall, dragging down consumer confidence and broader economic activity. As China navigates these hurdles, its leaders remain focused on long-term stability and global influence.