China is now less ambitious, the 2006 GDP target is at its lowest

Not an encouraging sign for the China the fact that he has revised its growth targets downwards, at the lowest levels in recent decades. The country of the Dragon is dealing with the significant drop in consumption and the slowdown in the real estate market. For 2026, growth of 4.5 to 5% is expected. In 2025 it had set a target of around 5%.

Chinese leaders say the economic model must move away from traditional drivers such as exports and manufacturing and towards consumption-based growth. Other “expected major development goals” for 2026 include an increase in the consumer price index of about 2% and “growth in residents’ income. Premier Li Qiang also announced that the Defense spending will increase by 7% this year, slightly lower than 7.2% a year ago, but still significantly higher than overall fiscal spending, warning against Taiwan’s “independence.”

Geopolitical risks are increasing

The data were released on the occasion of the opening of the annual session of the Chinese parliament, which is based in Beijing, in the Great Hall of the People. The government’s “work report” states that “geopolitical risks are increasing global economic dynamics remains sluggishwhile multilateralism and free trade are seriously threatened.” On the domestic front, Li acknowledged that the real estate market, in deep recession, was still “in a period of adjustment”, that “the imbalance between strong supply and weak demand is serious” and that it is now “more difficult for people to find a job and earn more”.

Global technological supremacy

However, he said the economy had “demonstrated remarkable resilience” over the past year, with China able to diversify its exports and increase spending on research and development. China is aiming for global technological supremacy in its next five-year plan – a plan that calls for “decisive advances” in cutting-edge technologies. However, the country faces serious challenges due to the slowdown of the domestic economy and the deterioration of global conditions caused by the US president’s trade war Donald Trump and the attack on Iran.

The range between 4.5% and 5% “offers greater policy flexibility to address domestic and external uncertainties,” said Yuhan Zhang, chief economist at the China Center at the Conference Board. The reduction in growth means the government will implement fewer expansionary fiscal policies this year, as Beijing has aimed at its long-term development goal of reaching a “middle” developed economy income by 2035 rather than short-term growth.

Some economists have serious doubts about the reliability of China’s GDP data, but the government’s target has far-reaching effects on politics, influencing budget spending capacity and loan flows of state banks. A was also set 4% fiscal deficit target for next year, the second consecutive year that Beijing has placed it above its preferred 3% level. The goal is one growth in the consumer price index of 2%. Analysts said this would pose a challenge given prolonged deflationary pressures, with a near-flat CPI, falling producer prices and the deflator, the broadest measure of prices in the economy, also negative. But the authorities are increasingly concerned about weak household sentiment and have announced the forthcoming launch of plans to try to stimulate consumer spending.

Taiwan

There is also a reference to Taiwan in the plan, with the aim of “repressing with determination the separatist forces of independence” of the island, of “opposing external interference, promoting the peaceful development of relations between the two sides of the Strait and carrying forward the great cause of national reunification”. Experts also noted that the working report did not harden its language toward the United States ahead of President Donald Trump’s planned visit to Beijing, and instead highlighted a more moderate tone.