China sets lower growth target as domestic consumption lags

"While recognizing our achievements, we are also clear-eyed about the difficulties and challenges we face. The decision to cut the growth target for this year is a big step that signifies this shift of policy priority. The policymakers have been saying on many occasions that the quality of growth is more important than the speed of growth."

"The Chinese Communist Party has repeatedly said the country's economic growth model must shift away from traditional drivers such as exports and manufacturing and towards consumption. China's economic development has been slowing down for years as the economy matures."

"All these steps will boost our strategic capacity to safeguard China's sovereignty, security and development interests. China, which has the second largest military budget after the United States, has decided to increase its defense spending by 7%. Beijing plans to spend 1.9096 trillion yuan on defense around one-third of the US military budget."

China announced a 2026 economic growth target of 4.5% to 5%, marking the lowest target in decades compared to last year's approximately 5% goal. This reduction reflects government efforts to address weak domestic consumption and a struggling property market. The announcement occurred at the annual Two Sessions political gathering before Premier Li Qiang opened the National People's Congress. The Chinese Communist Party emphasizes shifting the economic model from traditional drivers like exports and manufacturing toward consumption-based growth. Policymakers prioritize growth quality over speed. Simultaneously, China increased its defense budget by 7%, allocating 1.9096 trillion yuan for military spending, representing roughly one-third of the U.S. military budget.

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