China targets 4.5-5% growth as Two Sessions set economic agenda

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China’s annual “Two Sessions” in Beijing have again drawn global attention, as lawmakers and advisers gather to set the country’s economic and social agenda. Premier Li Qiang presented the Government Work Report on 5 March, outlining recent progress and targets for 2026 and beyond.

Beijing’s annual Two Sessions - comprising the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC) - serve as the main platform for setting the nation’s socio-economic priorities. In his address, Premier Li reviewed developments over the past year, assessed achievements under the 14th Five-Year Plan (2021–2025), and set out goals for 2026 as well as the forthcoming 15th Five-Year Plan (2026–2030).

The report sets a GDP growth target of 4.5–5 per cent for 2026, reflecting a flexible approach shaped by domestic reforms and global uncertainty. The aim, Li said, is to sustain resilient growth that benefits both China and the wider global economy.

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Often described as China’s most significant annual political event, the Two Sessions bring together thousands of deputies and advisers to deliberate on policies shaping the world’s second-largest economy. Li highlighted the resilience shown in 2025, when GDP grew by 5 per cent to reach 140.19 trillion yuan (about $19.3 trillion), despite sluggish global demand and ongoing domestic structural adjustments.

Reflecting on the 14th Five-Year Plan

The report devotes significant attention to reviewing the achievements of the 14th Five-Year Plan, portraying a period of substantial progress across multiple sectors. Over the past five years, China’s economy maintained an average annual growth rate of 5.4 per cent, far outpacing the global average. During that period, GDP rose from 110 trillion yuan (about $15.9 trillion) to more than 140 trillion yuan (about $19.3 trillion).

This growth was accompanied by structural improvements that strengthened the country’s innovation capacity and industrial capabilities.

More than 60 million urban jobs were created over the five-year period, including 12.67 million in 2025 alone, helping to keep urban unemployment stable. Grain output reached 715 million metric tonnes in 2025, ensuring food security for China’s 1.4 billion people.

China also reinforced its position as a global manufacturing leader. The country has now recorded the world’s largest manufacturing value-added output for 16 consecutive years. The new-energy vehicle sector exemplifies this strength, producing more than 16 million units in 2025. Advances in core technologies - including integrated circuits and aerospace - have also improved supply-chain resilience.

Reforms and opening-up measures accelerated during the plan period. Restrictions on foreign investment in manufacturing were fully removed, while high-standard opening-up initiatives expanded. China maintained its position as the world’s largest goods-trading nation.

Meanwhile, per-capita disposable income grew at an average annual rate of 5.4 per cent, supporting rising living standards and rural revitalisation. Environmental progress was also highlighted: major cities recorded 89.3 per cent of days with good or excellent air quality, forest coverage exceeded 25 per cent, and China established what the report describes as the world’s largest renewable energy system.

Targets for 2026

The GDP growth target of 4.5–5 per cent for 2026 represents a modest adjustment from the “around 5 per cent” target in recent years, acknowledging continued external pressures such as weaker global trade and geopolitical tensions.

Other key targets include the creation of more than 12 million new urban jobs, keeping consumer price index (CPI) growth at around 2 per cent, achieving grain output of about 700 million metric tonnes, and reducing CO₂ emissions per unit of GDP by roughly 3.8 per cent.

Fiscal policy will play a central role in supporting growth. The deficit-to-GDP ratio is set at around 4 per cent, an increase of 230 billion yuan ($33.3 billion) compared with 2025. General public budget expenditure is expected to reach a record 30 trillion yuan ($4.3 trillion).

To finance major projects, the government plans to issue 1.3 trillion yuan ($188.5 billion) in ultra-long special treasury bonds and 4.4 trillion yuan ($637.9 billion) in local government special-purpose bonds. Central budget investment will total 755 billion yuan ($109.4 billion), while an additional 800 billion yuan (nearly $116 billion) in bonds will be directed towards strategic initiatives.

These measures are intended to support infrastructure development, technological innovation and domestic consumption.

Looking ahead to the 15th Five-Year Plan

The report also outlines preliminary ambitions for the 15th Five-Year Plan. These include maintaining steady GDP growth, increasing research and development spending by at least 7 per cent annually, reducing cumulative CO₂ emissions by 17 per cent, and raising the digital economy’s share of GDP to 12.5 per cent.

Other targets include extending life expectancy to 80 years and increasing the average years of schooling for the working-age population to 11.7 years. Energy production capacity is expected to reach 5.8 billion metric tonnes of standard coal equivalent, while grain production capacity is projected to rise to 725 million metric tonnes.

Together, these objectives emphasise long-term sustainability as China prepares to address demographic changes, technological disruption and climate challenges.

High-quality growth: innovation and sustainability

A key theme of the report is the development of what officials describe as “new quality productive forces”. This includes advancing emerging industries such as integrated circuits, aviation, biomedicine and the low-altitude economy.

Future-oriented sectors - including quantum technology, embodied artificial intelligence, brain–computer interfaces and 6G - are also expected to see accelerated development. “Artificial intelligence plus” initiatives will integrate AI across a wide range of economic activities.

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To build a unified national market, the report calls for better regulation of production capacity, standardised market practices and measures to curb inefficient competition.

Opening-up policies will also expand. Pilot programmes are planned in sectors including value-added telecommunications, biotechnology and wholly foreign-owned hospitals, with the aim of encouraging greater international collaboration.

Rural revitalisation remains another priority. Measures include extending rural land contracts by 30 years and conducting a fourth national agricultural census. At the same time, new-type urbanisation policies aim to ease residency restrictions for rural migrants and reduce barriers to education access.

Efforts to stimulate consumption and investment include 250 billion yuan in funding for consumer goods trade-in programmes, measures to raise incomes and additional support for families through housing and childcare policies.

Green development remains central to the strategy. The report proposes establishing a national low-carbon transition fund and introducing policies to promote electric vehicles and improve energy efficiency.

In the property sector, authorities plan to manage new housing supply, reduce excess inventory and optimise existing stock in order to maintain a stable real-estate market.

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China Beijing economics Li Qiang Jobs Technology Aerospace Grain manufacturing