China has set its target for GDP growth to a record low of 4.5-5%, the first time since 1991 that the figure has dropped below 5%, reflecting an economic strategy that is shifting away from export-led growth to a model that leaders hope will be more resilient to external shocks.
Li Qiang, China’s premier, announced the target for 2026 in the opening session of the National People’s Congress (NPC), China’s annual parliamentary gathering, which began on Thursday.
Addressing the nearly 3,000 delegates gathered in the Great Hall of the People in Beijing, Li described 2025 as a “truly remarkable” year with “profound and complex developments both at home and broad”, according to the text of the government work report.
China also on Thursday published a draft of the 15th five-year plan, an economic strategy for the period 2026-2030, which will be formally voted on next week. The plan includes chapters on boosting consumption and enhancing innovation, key priorities for Beijing over the next five years.
The low GDP target was reflective of a shift to what Beijing is calling “high-quality growth” – that which is built on hi-tech industries and structural reform rather than the historic drivers of construction and exports.
China is also grappling with downward pressures on its economic growth, such as an ageing population, an ailing property sector, weak domestic demand and a slowdown that is expected as a country moves up the income scale.
“This year is a pretty important year for structural reform,” said Dan Wang, the China director for Eurasia Group, a political risk consultancy. Wang said that China was taking advantage of the one-year trade truce with the US to focus on reforming its economy away from export-led growth, while the lower target also reflected a “higher tolerance for unemployment”.
Li announced a 5.5% target for urban unemployment and pledged to create more than 12m new urban jobs, targets in line with previous years. But some experts have said that China’s shift to prioritising hi-tech industries may pose a risk to millions of blue-collar workers.
Guo Shan, a partner and chief economist at Hutong Research, a boutique advisory firm, said the modest target nevertheless demonstrated confidence as China needs to achieve only 4.3% growth over the next decade to achieve its goal of becoming a moderately developed country by 2035.
“After dealing with the US but still growing by 5% in 2025, Beijing has likely become more confident in setting and delivering China’s growth target,” Guo said.
China and the US agreed to a one-year pause in the trade war in October, with further negotiations expected this month before an expected visit by Donald Trump, the US president, to Beijing on 31 March.
Despite the trade war’s disruption to global supply chains, particularly those originating in China, the country ended last year with a record $1tn trade surplus. Li said that “financial and economic discipline” was a priority for 2026.
“With the US launching tariffs and other actions on not only China but the world, Beijing appears to view the next five years as a window for China to play a more active role in the global environment,” Guo said, noting that the government work report discussed the importance of international economic flows.
Among the targets laid out in the five-year plan, the plan for reducing China’s carbon intensity was pored over by climate experts. The plan calls for a 17% cut in carbon intensity – the amount of CO2 released per unit of economic activity – by 2030.
Li Shuo, director of China Climate Hub at the Asia Society Policy Institute, said the target “would leave China short of its pledge to reduce carbon intensity by more than 65% from 2005 levels by the end of the decade”.
Challenges in the first half of the decade – including the Covid-19 pandemic and a reliance on heavy industry – mean that China failed to reduce its carbon intensity by enough between 2020 and 2025 to make good progress on its 2030 target.
Recently published data showed that China’s carbon intensity fell 12% between 2020 and 2025, well short of the 18% target laid out in the 14th five-year plan. “The 17% target proposed today indicates a quiet recalibration, effectively acknowledging how difficult the original 2030 goal has become,” Li said.
China also published its 2026 budget on Thursday, which includes a 7% increase in defence spending, a slight decrease on previous years.
Another key focus is on boosting domestic demand, something that economists say is essential to China’s long-term economic stability. The economic plans released on Thursday reiterated this goal but provided scant detail about how that would be achieved. Last year an editorial in state media said that consumption should be managed with the “same rigour” as production, a shift from the traditional focus on heavy industry to stimulate growth.
Additional research by Lillian Yang
This article was written by Amy Hawkins in Beijing from The Guardian and was legally licensed through the DiveMarketplace by Industry Dive.