BEIJING — China signaled continuity rather than dramatic change for its economy, setting a slightly lower growth target for 2026 amid a property slump, domestic headwinds and rising global uncertainty.
Premier Li Qiang said in his report to the opening session of the National People’s Congress that the government aims for annual growth of 4.5% to 5% — down from last year’s actual 5% and slightly below the roughly 5% targets of recent years. It is the lowest growth target since 1991. Li read much of the 35-page report during a more-than-hourlong address and warned the leadership was “clear-eyed about the difficulties and challenges we face.”
Beijing is trying to balance two priorities: reviving weak domestic demand to lift the economy, while pressing ahead with President Xi Jinping’s push to make China a global leader in advanced technologies such as AI and robotics and reduce dependence on foreign semiconductors and components. The annual report said authorities will continue to support domestic demand but stopped short of unleashing major new stimulus. “Beijing continues to prioritize strengthening industrial self-reliance over boosting household consumption,” said Neil Thomas of the Asia Society Policy Institute.
The draft 2026 budget also trims the planned increase in defense spending to 7% — down from about 7.2% in recent years — bringing defense outlays to roughly 1.9 trillion yuan ($270 billion). The nearly 3,000-member Congress, largely seen as a body that endorses Communist Party decisions, is set to approve the report, budget and a five-year plan at its closing session next week.
The report highlighted mounting external risks and domestic imbalances. China faces tariff disputes and geopolitical tensions, and depends on Middle East oil and gas supplies, with recent regional conflict pushing up prices and threatening energy security. The government described free trade as under severe threat and said it confronts an “acute” mismatch of strong manufacturing supply and weak demand while needing to shift to new growth drivers. “Rarely in many years have we encountered such a grave and complex landscape,” Li said, pointing to intertwined external shocks and domestic difficulties.
China has propped up growth through exports even as domestic consumption lags. The country’s trade surplus surged to a record nearly $1.2 trillion last year, though exports to the U.S. have fallen after tariff increases and expanding shipments to other markets have prompted pushback abroad. Li pledged measures to raise living standards and spur consumer spending, which has been depressed as households tighten budgets amid a weakening property sector that has cut home prices and eliminated hundreds of thousands of jobs.
To stimulate purchases of goods, the government will issue 250 billion yuan ($36 billion) in bonds to fund rebates for consumers who trade in cars, appliances and other items for new ones. The report also called for city-level policies to manage new housing supply and reduce unsold inventory to stabilize the property market.
Real estate agents and many workers remain under strain. He Meiru, a southern China real estate agent, said he completes at best one sale every two months and now earns about 10,000 yuan ($1,400) monthly — less than a third of what he made five years ago. “It’s been a tough period for many — jobs are hard to find, people don’t have money,” he said. Ecaterina Bigos of AXA Investment Managers said reviving domestic demand is essential for sustainable growth but argued that moving China toward higher levels of household consumption will take time and will also require expanded social welfare and stronger job security.
The report comes amid a purge of military officials on corruption charges, part of moves analysts see as both reform and efforts to tighten Communist Party control over the People’s Liberation Army. Nine military officers were among 19 delegates dismissed from the National People’s Congress ahead of the meeting. The Congress report reiterated “the Party’s absolute leadership over the people’s armed forces” and added a new line emphasizing “ensuring political loyalty in the military” and improving military political conduct.
