China sets a lower economic growth target of 4.5% to 5% for 2026 as challenges loom

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China sets a lower economic growth target of 4.5% to 5% for 2026 as challenges loom

Chinese Premier Li Qiang speaks during opening session of the National People's Congress (NPC) in Beijing, Thursday, March 5, 2026. (AP Photo/Andy Wong)

2026-03-05T01:18:28Z

                                       

BEIJING (AP) — China signaled continuity rather than change in its economic policy Thursday, announcing a slightly lower target for GDP growth this year in the face of a prolonged property slump and other         data-gtm-enhancement-style="LinkEnhancementA" href="https://apnews.com/article/china-party-congress-economy-property-jinping-e9b8c257561f67b19fbe9b2521835343">headwinds at home and growing uncertainty abroad.

Premier Li Qiang announced a target of 4.5% to 5% annual growth in his annual report presented to the opening session of         data-gtm-enhancement-style="LinkEnhancementA" href="https://apnews.com/article/china-party-congress-economy-property-jinping-e9b8c257561f67b19fbe9b2521835343">this year’s meeting of the National People’s Congress. That compares to actual growth of 5% last year and a target of about 5% in each of the preceding three years.

“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 a more than hourlong address.

China’s leaders are trying to balance the pursuit of two goals: reviving         data-gtm-enhancement-style="LinkEnhancementA" href="https://apnews.com/article/china-manufacturing-economy-pmi-685ab43bcb8d113e7df0b9be8e9f417d">a flagging economy by boosting domestic spending while also furthering Chinese leader Xi Jinping’s ambitions to build China into a global leader in AI, robotics and other cutting-edge technologies. In line with the government’s approach in recent years, the annual report Thursday indicated it would continue to support domestic demand but not unleash any major new stimulus to boost economic growth in the short term.

   
       
   

In a draft budget for 2026, the government also trimmed China’s annual increase in its defense spending to 7%, down from 7.2% last year. The Congress, a largely ceremonial body that endorses policies set by the Communist Party leadership, is due to approve the annual report and budget at its closing session next week.

   
       




   

The economy has also been buffeted by tariff wars and actual wars. China, like much of Asia, is heavily dependent on oil and natural gas from the Middle East, and the American and Israeli war with Iran has         data-gtm-enhancement-style="LinkEnhancementA" href="https://apnews.com/article/oil-prices-iran-us-hormuz-tanker-8a6d6fb35c89d9b0db4c4846f290c2c3">driven up prices and threatened supplies.

   
   
       
           
               
   
   


   
   

       
   

           
       
   
   

The report said that free trade is under severe threat and noted rising geopolitical risks. China’s exports to the United States have been hit by         data-gtm-enhancement-style="LinkEnhancementA" href="https://apnews.com/article/supreme-court-tariffs-trump-0485fcda30a7310501123e4931dba3f9">tariffs imposed by President Donald Trump, though it has         data-gtm-enhancement-style="LinkEnhancementA" href="https://apnews.com/article/china-latin-america-trump-trade-e78ccd51a7f66099d84fda885d2907a3">expanded exports to other parts of the world.

   
       
   

Domestically, the report highlighted an “acute” imbalance between strong supply and week demand and the challenge of transitioning the economy to new drivers of growth.

“At home, we still face quite a few problems and challenges, both old and new,” the report said.

This year’s meeting of the nearly 3,000-member legislature will also endorse a five-year plan setting policy priorities until 2030.

Setting a range for growth of 4.5% to 5% gives the government more leeway to adjust policies this year. The report set the goal but added “while striving for better in practice.”

“In proposing these targets, we have considered the need to leave some room for structural adjustments, risk prevention, and reform in the opening year of this five-year plan period, so as to lay a solid foundation for delivering better performance in the coming years,” the report said.

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AP Writer Huizhong Wu contributed.

                                   
                               
                           

                           
                   
                   
                   

                   
                   
   
       
           
               
   
       
           
               
                   
     
   

   
   
       

   

   
       

   
       
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                KEN MORITSUGU
           
       

       
           
                Moritsugu covers political, economic and social issues from Beijing for The Associated Press. He has also reported from New Delhi, Bangkok and Tokyo and is the AP’s former news director for Greater China and for Japan and the Koreas.
           
       
       
       
           
               
                   
                       
   
   
       
           
       
   
   
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                CHAN HO-HIM
           
       

       
           
                Chan covers China business, economy and finance for The Associated Press, reporting on key sectors from technology to trade. He is based in Hong Kong.
           
       
       
       
           
               
                   
                       
   
   
       
           
       
   
   
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Source: China sets a lower economic growth target of 4.5% to 5% for 2026 as challenges loom