BEIJING — China’s leadership signaled continuity over dramatic intervention for the economy on the opening day of the National People’s Congress, setting a 2026 GDP growth target of 4.5% to 5% — the lowest official goal since 1991. Premier Li Qiang, reading much of a 35-page work report, framed the lower target as a realistic response to intensifying domestic and international challenges after last year’s roughly 5% expansion.
“While recognizing our achievements, we are also clear-eyed about the difficulties and challenges we face,” Li said. He described a complex global landscape marked by rising geopolitical risks, tariff disputes, and actual wars that threaten energy and supply chains, while domestically pointing to an “acute” imbalance between strong manufacturing supply and weak demand and the slow transition to new growth drivers.
The government’s approach aims to steady growth without resorting to large-scale stimulus. The report reiterated support for boosting domestic demand but emphasized continued prioritization of industrial self-reliance — aligning with President Xi Jinping’s push to strengthen China’s capabilities in AI, robotics and advanced technologies and to reduce dependence on foreign high-end semiconductors and components. Analysts say that emphasis makes Beijing likelier to favor targeted industrial investment over broad measures to spur household spending. “Beijing continues to prioritize strengthening industrial self-reliance over boosting household consumption,” said Neil Thomas of the Asia Society Policy Institute.
Fiscal and defense items in the draft 2026 budget also reflect cautious adjustments. Defense spending is slated to rise about 7% year-on-year, slightly lower than recent increases of roughly 7.2%, bringing military outlays to roughly 1.9 trillion yuan (about $270 billion). The nearly 3,000-member National People’s Congress, largely a rubber-stamp body for party policy, is expected to approve the report, budget and an accompanying five-year plan when it concludes next week.
With household consumption subdued amid a prolonged property downturn, China has leaned on exports to sustain growth. The economy posted a record trade surplus near $1.2 trillion last year even as exports to the United States fell after higher U.S. tariffs; growth in shipments to other markets has prompted pushback from some governments worried about the effects on local industries and jobs.
To try to revive household spending, the government pledged several modest demand-support measures. Beijing will issue 250 billion yuan ($36 billion) in special bonds intended to finance consumer rebates for people who trade in cars, appliances and other goods for newer models. Localized, city-specific policies will also be used to manage new housing supply and reduce unsold inventory to stabilize the property market. But the report stopped short of a sweeping stimulus package, instead emphasizing targeted actions.
The strain on the property sector and its workers was visible on the ground. He Meiru, a real estate agent in southern China, said he now closes roughly one deal every two months and earns about 10,000 yuan ($1,400) a month — less than a third of his income five years ago. “It’s been a tough period for many — jobs are hard to find, people don’t have money,” he said. Economists say that lasting recovery will require not only a stabilization of housing but also stronger social safety nets and job security to persuade households to spend more. “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 touched on recent changes within the military. A broad anti-corruption campaign has led to the removal of several senior officers, and nine military officers were among 19 delegates dismissed from the Congress ahead of this year’s meeting. The work report reiterated “the Party’s absolute leadership over the people’s armed forces,” added language aimed at ensuring political loyalty in the military and said further steps would be taken to improve military political conduct. Observers view the moves as part of efforts to reform and modernize the People’s Liberation Army while consolidating Communist Party control.
Overall, the tone of the government’s plans is cautious: accept slower near-term growth, shore up critical industries and seek incremental measures to revive consumption. Policymakers face the delicate task of balancing long-term strategic priorities — particularly technological self-reliance and defense modernization — with the immediate need to repair confidence among consumers and in the battered property sector. The NPC is expected to formally endorse the targets and budget at its closing session next week.