China signaled continuity rather than dramatic change for its economy, setting a slightly lower growth target for 2026 as it faces a property slump, weak domestic demand and rising global uncertainty. Premier Li Qiang told the opening session of the National People’s Congress that the government aims for annual growth of 4.5 to 5 percent, down from last year’s actual 5 percent and the lowest target since 1991. Li read large portions of a 35-page report and cautioned the leadership is ‘clear-eyed about the difficulties and challenges we face.’
The government is trying to balance two priorities: revive domestic consumption to lift growth, while pursuing President Xi Jinping’s strategy of industrial self-reliance in advanced technologies such as AI, robotics and semiconductors. The report said authorities will continue to support domestic demand but stopped short of major new stimulus, signaling an emphasis on boosting industrial capabilities over rapidly expanding household spending. Neil Thomas of the Asia Society Policy Institute noted that Beijing ‘continues to prioritize strengthening industrial self-reliance over boosting household consumption.’
The draft 2026 budget reduces the planned rise in defense spending to about 7 percent, slightly lower than recent years, bringing defense outlays to roughly 1.9 trillion yuan (about $270 billion). The nearly 3,000-member National People’s Congress, largely seen as endorsing party decisions, is expected to approve the growth target, budget and a five-year plan at its closing session next week.
Li’s report highlighted mounting external risks and internal imbalances: tariff disputes and geopolitical tensions, dependence on Middle East energy supplies amid regional conflict, and what it called an acute mismatch of strong manufacturing supply and weak domestic demand. The government said free trade faces serious threats and emphasized the need to shift toward new growth drivers.
China has leaned on exports to prop up growth even as household spending lags. The country’s trade surplus surged to a record near $1.2 trillion last year, although exports to the United States have slipped following tariff increases and growing shipments to other markets have prompted pushback. To stimulate consumption, Beijing will issue 250 billion yuan (about $36 billion) in bonds to fund rebates for consumers who trade in cars, appliances and other goods. The report also called for city-level policies to manage new housing supply and reduce unsold inventory to steady the property market.
The property downturn continues to strain workers and agents. Southern China agent He Meiru said he now completes at best one sale every two months and earns about 10,000 yuan ($1,400) a month, 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.’ Ecaterina Bigos of AXA Investment Managers said reviving domestic demand is essential for sustainable growth but will take time and require expanded social welfare and stronger job security.
The report arrived amid a purge of military officials on corruption charges that analysts see as both reform and tighter party control over the People’s Liberation Army. Nine military officers were among 19 delegates dismissed before the meeting. The Congress report reiterated the party’s absolute leadership of the armed forces and added language emphasizing political loyalty in the military and improved military political conduct.
Overall, Beijing’s approach for 2026 reflects cautious management: modest growth ambition, targeted consumption support, continued investment in strategic industries, and a focus on political and institutional control as external and domestic pressures persist.