China has set its economic growth target at 4.5-5% in 2026, marking the lowest level since Beijing first started publishing such figures in the early 1990s.
Li Qiang Flags Tough Economic Climate
At the opening session of this year’s meeting of the National People’s Congress on Thursday, Chinese Premier Li Qiang described the current situation as exceptionally “grave and complex,” with external shocks, domestic challenges, and difficult policy decisions all intertwined.
The world’s second-largest economy has set a moderate growth projection after three consecutive years of targeting “around 5%” growth from 2023 to 2025. Despite a sluggish rebound from strict COVID-19 restrictions and last year’s tariff measures under President Donald Trump, China still met its growth target.
China’s overall growth has slowed due to a prolonged property slump, weak investment and consumption, and deflation, leading the government to adopt its most conservative outlook since early 2020 following the Covid-19 outbreak.
Over the week-long session, nearly 2,900 delegates are set to endorse China’s next “Five-Year Plan,” a strategic roadmap designed to steer government priorities and solidify its position as a global technology leader.
Challenges Mount Ahead Of Trump-Xi Summit
The new target comes amid many significant challenges. According to data released on Wednesday, China’s factory activity took a hit in February due to an extended holiday, disrupting production. This marked the second straight month of manufacturing contraction.
Meanwhile, the instability in Venezuela and the ongoing war in Iran have added another layer of complexity for the Xi Jinping-led nation. Mohamed A. El-Erian, Allianz’s chief economic adviser, noted that China is losing access to key cost-effective energy sources, having already been cut off from discounted Venezuelan oil and now facing challenges with Iranian supplies amid the closure of the Strait of Hormuz.
Xi is scheduled to meet with Trump in April for a three-day summit in China to discuss trade, technology, Taiwan, and other key issues.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by a Benzinga editor.
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