China Adjusts Growth Strategy as Trade Tensions and Economic Headwinds Rise

China Lowers GDP Target to 4.5% to 5% Amid Trade Tensions and Domestic Economic Pressures​

Beijing, March 5: China has lowered its gross domestic product growth target to a range of 4.5 percent to 5 percent for the current year, citing escalating global uncertainties, trade tariff tensions with the United States, and mounting domestic economic challenges.

The revised target was announced by Chinese Premier Li Qiang in his government work report presented at the opening session of the National People's Congress, which convened in Beijing on Thursday.

First Reduction in Three Years​

For the past three years, China has maintained an annual GDP growth target of around 5 percent despite intensifying domestic and external pressures. This year marks the first time the target has been lowered to a range of 4.5 percent to 5 percent.

China’s economy expanded by 5 percent last year, reaching USD 20.01 trillion. The growth came despite continued US tariff measures. However, domestic consumption remained weak, reinforcing concerns over economic momentum.

Key Economic Targets for 2026​

Presenting the annual work report, Li stated that the government will strive to achieve economic growth within the revised range in practice.

In addition to the GDP goal, China has outlined several development targets for the year:

• Urban unemployment rate of around 5.5 percent
• Creation of over 12 million new urban jobs
• Consumer price index growth of approximately 2 percent
• Stable grain output of around 700 million tonnes
• Reduction of about 3.8 percent in carbon dioxide emissions per unit of GDP

The government also aims to ensure personal income growth aligns with overall economic expansion and maintain a stable balance of payments.

Focus on Boosting Domestic Consumption​

Addressing the persistent stagnation in domestic demand, which has increased China’s reliance on exports for growth, Li said the government will actively promote consumption and implement income growth plans for both urban and rural residents.

Authorities plan to introduce special initiatives to stimulate consumption. These include practical measures to increase earnings among low income groups, enhance property income, and refine remuneration and social security systems in 2026.

To support consumer spending, 250 billion yuan, equivalent to USD 36.17 billion, has been allocated for consumer goods trade in programs. Additionally, a special fiscal financial coordination fund worth 100 billion yuan will be established to facilitate expansion of domestic demand.

Political Backdrop and Leadership Presence​

The annual parliamentary session began on Wednesday amid heightened global tensions and economic uncertainty. The session also comes against the backdrop of ambitious plans to develop new productive forces, including artificial intelligence, to revitalize the slowing economy.

President Xi Jinping, 72, attended the opening session of both the NPC and the national advisory body, the Chinese People's Political Consultative Conference, which comprises over 2,500 representatives from civil society, party institutions, and the military.

More than 2,000 deputies were present at the NPC session on Thursday, where Xi appeared alongside senior leadership of the ruling Communist Party of China.

The two sessions signal the start of China’s annual political season, which runs for about two weeks and features public appearances by top leadership along with internal policy deliberations. Xi’s attendance marked his first joint appearance with party officials of all ranks, including members of the People’s Liberation Army, following recent large scale military purges.