China sets lowest economic growth target in decades ahead of Trump summit

By John Liu, CNN

Beijing/Hong Kong (CNN) — China set its lowest economic growth target in decades on Thursday, announcing it would aim for 4.5-5% expansion for 2026 as the world’s second-largest economy grapples with weak domestic demand and an uncertain global outlook.

The moderate projection follows three consecutive years of aiming for “around 5%” growth from 2023 to 2025, which the country achieved despite a slow recovery from stringent Covid-19 controls and US President Donald Trump’s tariff offensive last year. Still, China’s broader growth trajectory has flattened, weighed down by a prolonged property crisis, declined investment, tepid consumption and deflation.

Not since the early days of the Covid-19 outbreak has the government been less ambitious in its outlook. In 2020, with the economy nearly paralyzed by the coronavirus, officials passed on setting a numerical target. The 2026 target is the lowest since Beijing began announcing such figures in the early 1990s.

“Over the past year, the Chinese economy has proved remarkably resilient, forging ahead against headwinds,” Chinese Premier Li Qiang, the country’s No 2 official, said Thursday at the opening of the annual assembly of China’s rubber-stamp legislature, the National People’s Congress (NPC).

“Rarely in many years have we encountered such a grave and complex landscape, where external shocks and challenges were intertwined with domestic difficulties and tough policy choices,” he said, acknowledging that the domestic economy remained in the midst of “deep-seated structural problems.”

Over the week-long meeting ahead, nearly 2,900 delegates will approve China’s next “Five-Year Plan,” a policy blueprint aimed at guiding government priorities for the next few years to cement the country’s status as a global tech superpower.

The meeting comes weeks before Trump’s visit to Beijing, where Chinese leader Xi Jinping is set to host him for a three-day summit covering trade, technology and Taiwan, among other issues.

After launching its economic reforms in the late 1970s, China experienced nearly three decades of mostly double-digit growth, overtaking Japan in 2010 to become the world’s second-largest economy. But its momentum has slowed over the past decade, exacerbated by stringent pandemic controls, while regional rival India has surpassed it as the fastest-growing major economy.

As a US-led war in the Middle East rages, China’s top leaders are burnishing an image of resilience and stability at the landmark gathering in Beijing.

A year into Trump’s second term, Xi has more reasons to stay confident in a world increasingly shrouded in uncertainties.

In response to Trump’s tariff offensive, he has refused to back down, deploying similar levies on American goods or export controls on critical rare earth elements. Even with those levies, China nudged a record trade surplus last year by pivoting to other markets.

The US Supreme Court ruling that nullified Trump’s tariff power last month further validated China’s strategy of patience and resolve, as it brought down the effective US tariffs on Chinese goods to a level much closer to other countries.

These developments are expected to boost Xi’s standing as he greets the American president for the first time since 2017 in Beijing in a few weeks, as they seek to iron out trade differences and other issues following a truce reached in October.

External uncertainties aside, Xi faces mounting pressures at home including the slowing economy, which the government acknowledged in its decision to lower the growth target.

Although China met its “around 5%” goal last year, only half of its provinces achieved their individual targets.

Helen Chiao, chief Greater China economist at Bank of America, said the moderate goal underscored policymakers’ pragmatic approach, as they have signaled in recent years a transition from high-speed to high-quality growth.

“It’s also a reflection… that policymakers might be acknowledging the fact that the domestic demand weakness is probably going to be challenging to remove,” she said.

For the first time in three decades, investment in housing, manufacturing and infrastructure – major drivers of the country’s economic growth – reported a decline last year. Meanwhile, the property sector has entered its fifth year of crisis with sales and investment continuing to slump, dragging the economy and weighing down consumer confidence as well as spending.

On Thursday, Li highlighted the building of a robust domestic market as a policy priority for this year, pledging coordinated efforts to bolster consumption and investment.

To do that, China will earmark 250 billion yuan ($36.2 billion) in special bonds to finance a trade-in program for consumer goods, a nationwide cash-for-clunkers subsidy scheme that started in 2024. A special fund of 100 billion yuan will be created to facilitate domestic demand expansion through measures such as loan interest subsidies and financing guarantees.

On other fronts, China vowed to continue a “more proactive fiscal policy” as it maintained its budget deficit at around 4% of gross domestic product. It also maintained its annual inflation target at around 2%, same as last year, though economists said deflationary pressures remain a problem across various sectors.

The-CNN-Wire
™ & © 2026 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.

CNN’s Joyce Jiang in Beijing and Xiong Yong contributed to this report.