BEIJING — China has signaled continuity rather than change for its economy, setting a slightly lower growth target for 2026 amid a property slump and domestic and international headwinds. Premier Li Qiang announced a target of 4.5% to 5% annual growth in his report to the opening session of this year’s National People’s Congress, down from 5% actual growth last year and about 5% targets in prior years. It is the lowest growth target since 1991.
“While recognizing our achievements, we are also clear-eyed about the difficulties and challenges we face,” Li said, reading much of the 35-page report in an hourlong address.
The government is trying to balance boosting domestic spending to revive the flagging economy with top leader Xi Jinping’s ambitions to build China into a global power in AI, robotics and other advanced technologies and to reduce dependence on foreign high-end semiconductors and components. The report indicated continued support for domestic demand but stopped short of 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 trimmed the annual increase in defense spending to 7%, down slightly from 7.2% in recent years, bringing defense outlays to about 1.9 trillion yuan ($270 billion). The nearly 3,000-member National People’s Congress, largely a ceremonial body that endorses party-set policies, is expected to approve the report, budget and a five-year plan at its closing session next week.
Li described a challenging global and domestic environment, citing rising geopolitical risks, tariff disputes and actual wars that threaten energy supplies. Domestically, the report highlighted an “acute” imbalance between strong manufacturing supply and weak demand and the difficulty of shifting to new growth drivers. “Rarely in many years have we encountered such a grave and complex landscape, where external shocks and challenges were intertwined with numerous domestic difficulties and tough choices,” Li said.
With domestic demand weak, China has leaned on exports to sustain growth. Its trade surplus surged to a record nearly $1.2 trillion last year, even as exports to the U.S. fell after higher tariffs. Growth in exports to other markets has prompted pushback from some governments concerned about their own industries and workers.
Li pledged measures to improve living standards and boost consumer spending, which has lagged as households tighten belts amid a housing downturn that has depressed prices and eliminated hundreds of thousands of jobs. The government said it would issue 250 billion yuan ($36 billion) in bonds to fund rebates for consumers who trade in cars, appliances and other products for new ones. It will also use city-specific policies to manage new housing supply and reduce unsold properties to stabilize the market.
Real estate agents and workers describe the strain. He Meiru, a southern China agent, said he is lucky to close one deal every two months and now earns about 10,000 yuan ($1,400) a month — less than a third of five years ago. “It’s been a tough period for many — jobs are hard to find, people don’t have money,” he said. Analysts say recovery will require property stabilization plus stronger social welfare and job security to encourage households to spend. “Reviving domestic demand is key for sustained long-term growth,” said Ecaterina Bigos of AXA Investment Managers. “However, redirecting China toward higher levels of domestic consumption will take time.”
The report also addressed recent changes in military leadership. A widespread purge of military officials on corruption charges has removed several top officers, a move analysts see as aimed at reforming and modernizing the People’s Liberation Army and ensuring Communist Party control. Nine military officers were among 19 delegates dismissed from the Congress ahead of this year’s meeting. The report reiterated “the Party’s absolute leadership over the people’s armed forces” and added a line about ensuring political loyalty in the military and improving military political conduct.