China sets lowest growth target in more than three decades

BeijingChina has set a growth target of between 4.5% and 5% for 2026. This is the first time since 1991 that the Asian giant has considered GDP growth below 5%.

As every year, the roadmap of Chinese policy was presented with all the pomp of communism at the opening of the annual session of the National People's Congress (NPC), China's legislative body. A setting marked by red carpets and golden lights hosted the solemn ceremony in the Great Hall of the People's Palace in Tiananmen Square. Premier Li Qiang read for just over an hour the working document outlining the economic, political, and diplomatic guidelines for 2026. Furthermore, this year the NPC is especially important because it will approve the 15th Five-Year Plan (2026-2030).

A disciplined audience followed the explanation, turning each page of the report simultaneously, creating a curious and noisy choreography. The NPC session is characterized by much ritual and little debate, as the topics are agreed upon beforehand. In the secretive world of Chinese politics, not even the end date of the meeting has been announced. It is assumed that the representatives will vote on the document and the five-year plan between March 11 and 15. The vote always approves proposals with near unanimity.

In his speech, Li Qiang defended multilateralism and affirmed that "China is willing to work with all members of the international community to promote an equal and orderly multipolar world and universally beneficial and inclusive economic globalization." These words carry particular weight at a time of international crisis due to the US and Israeli military operation against Iran. However, the NPC is focused on Chinese domestic politics.

The Prime Minister, despite highlighting the resilience of the Asian giant's economy, warned of the external and internal challenges facing China. However, he expressed confidence in the future prospects for the world's second-largest economy. Thus, China is preparing to face these internal and external challenges by lowering its growth target and deploying a range of support measures to consolidate the economy.

This is the first time, with the exception of the pandemic year, that a fixed GDP growth target has not been set. This year, a range of half a percentage point has been chosen, allowing for margins of error and greater flexibility. The decision also implies a commitment to changing the economic model and definitively opts for what official documents have called "quality growth." That is, growing less, but growing better. Behind this theory lies a commitment to technological development with the goal of becoming self-sufficient. This would eliminate the problems China currently faces with US sanctions, which limit its access to the most advanced microchips. Beijing intends to particularly stimulate industries related to quantum technology, energy, and artificial intelligence. Domestically, Li Qiang has announced measures to develop and unify the domestic market. He has also announced the goal of creating twelve million new urban jobs and maintaining the unemployment rate at around 5.5%, the same targets as for 2024 and 2025. On the other hand, China remains heavily dependent on manufacturing and exports. In 2025, it recorded a record trade surplus of $1.19 trillion, but this positive figure cannot mask the fact that excess capacity has become a problem, as it will not be sustainable in the long run given the context of trade wars and continuous price reductions. Rebalancing the market and incentivizing consumption remains an unfinished task.

Army subservient to the communist party

In 2026, the military budget will also decrease slightly, increasing by only 7% year-on-year to reach $277 billion. Last year it grew by 7.2%. China already has the second-highest defense spending in the world, surpassed only by the United States. Many defense analysts claim that the Asian giant is actually manipulating the figures and does not include spending on military innovation and development.

Thus, China's military buildup is linked to the geopolitical situation. The attack on Iran, an ally of Beijing, further justifies its interest in arming itself. Although for Xi Jinping, the focus is on the Indo-Pacific and the priority is the reunification of Taiwan. The premier spoke harshly against Taiwanese independence and foreign interference. He assured that action would be taken against the "separatist forces." Beyond the spending figures, the focus on the military is centered on the anti-corruption campaign personally led by Xi Jinping, which has decapitated the military leadership. The dismissal of the charismatic General Zhang Youxia, vice chairman of the Central Military Commission (CMC) and the country's highest-ranking officer, has shaken the military command. In his speech, Premier Li Qiang reaffirmed the Communist Party's control over the military, stating that "China will maintain the absolute leadership of the Communist Party over the people's armed forces," and assured that the political rectification of the military will continue to deepen. In China, the army is under the command of the Communist Party and has the mandate to defend it.