China sets 2026 economic growth target at 4.5% to 5%

China has set its economic growth target for 2026 at between 4.5 per cent and 5 per cent and will strive to achieve better results in practice, according to a government work report submitted Thursday to the country’s top legislature for deliberation.

The main development targets for this year also include maintaining the surveyed urban unemployment rate at around 5.5 per cent and creating more than 12 million new jobs in urban areas.

Other targets include keeping the increase in the consumer price index at around 2 per cent, ensuring personal income growth in line with economic growth; a basic equilibrium in the balance of payments, and achieving grain output of around 700 million tonnes.

The report also aims for a reduction of around 3.8 per cent in carbon dioxide emissions per unit of gross domestic product.

China on Thursday set out a five-year roadmap to turbocharge scientific breakthroughs and embed AI across its industrial economic machine, framing technological ‌dominance as a core national security goal in its sharpening rivalry with the US.

In its 15th strategic plan since adopting Soviet-style quinquennial policy cycles in the 1950s, Beijing has outlined a bet that technology — ​not consumption - will drive its ⁠next phase of development despite growing structural pressures.

The objectives reflect President Xi Jinping’s vision of developing “new productive forces” to escape the middle-income trap, counter the demographic downturn, ‌and enhance self-sufficiency to insulate China from US export controls.

At the ‌opening of the annual parliament meeting, Premier Li Qiang praised China’s ability to withstand US President Donald Trump’s tariff hikes, but said “multilateralism and free trade are under severe threat,” announcing 7% increases in the defence budget, as well as in research and development.

Li acknowledged an “acute” imbalance between strong supply and weak demand and risks from a worsening property sector crisis and high local government debt.

These challenges have pushed Beijing to set a slightly lower growth target of 4.5%-5% for 2026, ‌down from last year’s 5%, which was met largely through a one-fifth surge in its trade surplus to a record $1.2 trillion.

As widely expected, the five-year plan also pledged a “notable” increase in household consumption, without specifying figures, ⁠dampening expectations for demand-side reforms.

Last year’s trade punches with the Trump administration, which briefly escalated to embargo-like conditions of triple-digit tariffs, showed the importance of its supply chain dominance as leverage.

China vowed to maintain its competitive edge in rare earths.

The US and its allies are still years away from breaking their reliance on China for these materials vital to everything from AI chips to defence systems.

“China’s government remains laser-focused on spurring technological breakthroughs and high-tech investment,” said Fred Neumann, chief Asia economist at HSBC. “In part, this is motivated by competition with the United States for control over the technologies of the future.”

“Many international observers may be left disappointed, therefore, by slower progress in rebalancing the economy away from investment towards consumption.”

China invests 20 percentage points of GDP more than the global average, while its households spend roughly 20 points less - a state-controlled, debt-driven development model that analysts say creates industrial ​overcapacity and fuels trade tensions abroad and deflationary pressures at home. “The rebalancing challenge that China faces, and that will take years to achieve, is implicitly acknowledged by a weaker growth target ‌for the coming year,” Neumann added.

The five-year plan aims to raise the value-added of “core digital economy industries” to 12.5% of GDP and roll out new policies for an integrated national data market, AI adoption across the full supply chain, and an AI security system.

Ambitions span biomedicine, quantum tech, atomic-scale manufacturing, hyper-scale computing clusters, nuclear fusion, brain-computer interfaces and even commercialising AI-powered humanoid robots.

“Beijing is trying to manage a ‘controlled glide’ in growth while building a new economy based ⁠on technology rather than property,” said Andy Ji, Asian FX & rates analyst at ITC Markets.

“It is a high-stakes rebalancing where the government is betting the house on AI and advanced manufacturing.”

State-owned enterprises were enrolled to create demand for made-in-China semiconductors and drones.

The 141-page plan name-checks AI over 50 times, envisioning robots plugging labour shortages and factories operating with little human oversight. It builds on a breakout year for Chinese developers - led by DeepSeek - who rapidly closed the gap with US leaders such ​as OpenAI and Gemini.

Reuters