People's Congress in Beijing China sets lowest growth target for decades

China is lowering its economic expectations: At the start of the People's Congress, Beijing sets the lowest growth target for decades - and still sticks to its export-driven course.

Keystone-SDA

05.03.2026, 02:54

05.03.2026, 07:25

SDA

At the start of the National People's Congress, China issued the lowest growth target for its economy in decades. Gross domestic product (GDP) is set to grow by 4.5 to 5 percent in 2026, according to the government's work report.

Premier Li Qiang presented this in the Great Hall of the People in Beijing. Since 2023, the communist leadership had always set the growth target at around five percent. The last time a figure of 4.5 percent was set was in 1991.

Economists see the cautiously formulated target as a signal that the leadership is preparing for more moderate growth. The new lower limit takes pressure off the government to stimulate the economy with major investment programs. Beijing is thus also lowering expectations in uncertain global times with wars in Ukraine and Iran, for example, and in view of the trade dispute with the USA under President Donald Trump.

The National People's Congress is China's parliament and meets once a year in Beijing. The almost 2,800 delegates are not elected in free elections. Political decisions are usually considered to have been previously agreed within the Communist Party.

Prime Minister sees challenges

Li confirmed in his report that China is facing numerous challenges. The changing international environment is having a greater impact on the country. At the same time, global economic momentum remains weak and multilateralism and free trade are under increasing pressure.

The government also sees problems at home. The transition to new growth drivers is difficult, while the imbalance between strong production and weak demand is clear. It is becoming more difficult for many people to find work and increase their income. In addition, some local governments are under considerable pressure due to the situation on the real estate market, which remains in crisis.

However, many experts do not see a fundamental change of course. China's economic model remains industry and export-oriented. According to the key points known so far, the new five-year plan to be adopted at the People's Congress will not only aim to strengthen consumption, but will also continue to emphasize the need to drive forward technological development. AI and robots are set to further conquer China's everyday life and economy in the coming years.

Budget leaves room for economic growth

Beijing also appears to be focusing on continuity in its financial policy. The new draft budget envisages a deficit of around four percent of economic output. This would allow the government to continue to support the economy without launching a significantly larger economic stimulus program.

"In a way, China is facing a number of serious challenges that make the next big policy plan an 'all or nothing' question," said China analyst Katja Drinhausen from the Berlin research institute Merics. Although attempts are being made to increase consumption through measures such as social policy reforms or regional development goals, dependence on exports will remain an important pillar of the Chinese economy, said Drinhausen.

Consumption has long been an issue

The Communist Party has long been talking about strengthening consumption as a means of guaranteeing prosperity and maintaining growth. The International Monetary Fund (IMF) has also recommended that the People's Republic should make the transition to a consumption-driven growth model its "top priority". Private consumption has so far only contributed just under 40% to growth and is therefore below the average for industrialized countries in the OECD, according to IMF data.

China is also continuing its current course in the military. According to the government, the defense budget is set to increase again. Expenditure of around 1.7 trillion yuan (around 236 billion euros) is planned for 2026, an increase of around seven percent. This means that China remains the country with the second largest military budget in the world after the USA. The leadership in Beijing regularly justifies the increase with the modernization of the armed forces and the protection of national interests.