China sets a lower economic growth target of 4.5% to 5% for 2026 as challenges loom

"While recognizing our achievements, we are also clear-eyed about the difficulties and challenges we face. The government is striving to balance two goals: reviving the flagging economy by boosting domestic spending while also furthering top leader Xi Jinping's ambitions to build China into a global power in AI, robotics and other advanced technologies and one that is not dependent on the U.S. or others for high-end semiconductors and other components."

"Beijing continues to prioritize strengthening industrial self-reliance over boosting household consumption. In line with the government's approach in recent years, the annual report indicated it would continue to support domestic demand but not unleash any major new stimulus to boost growth."

China announced a 4.5% to 5% growth target for 2025, marking the lowest target since 1991, signaling continuity amid economic challenges including property sector weakness and global uncertainty. Premier Li Qiang presented this target to the National People's Congress, acknowledging both achievements and difficulties facing the nation. The government aims to balance two competing objectives: reviving the flagging economy through domestic spending while advancing Xi Jinping's strategic goals of building China into a global technological power independent from U.S. reliance for semiconductors and advanced components. Rather than implementing major new stimulus measures, Beijing continues its recent approach of supporting domestic demand while prioritizing industrial self-reliance over boosting household consumption. The defense spending increase was also trimmed to 7% from 7.2% in previous years.

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