China lowers 2026 growth target to 4.5 to 5 per cent, first cut in three years amid mounting headwinds

China has unveiled its 2026 GDP growth target at the annual Two Sessions, a closely watched signal of policy direction as the economy grapples with weak demand, property strains and trade pressures. Advertisement East Asia China lowers 2026 growth target to 4.5 to 5 per cent, first cut in three years amid mounting headwinds China has unveiled its 2026 GDP growth target at the annual Two Sessions, a closely watched signal of policy direction as the economy grapples with weak demand, property strains and trade pressures. The national flag of the People's Republic of China flutters in the wind at Tiananmen Square, ahead of the annual meeting of the National People’s Congress (NPC), which begins this week, in Beijing, China, on Mar 3, 2026. (File photo: Reuters/Maxim Shemetov) New: You can now listen to articles. This audio is generated by an AI tool. Bong Xin Ying Bong Xin Ying 05 Mar 2026 08:06AM (Updated: 05 Mar 2026 08:14AM) Bookmark Bookmark Share WhatsApp Telegram Facebook Twitter Email LinkedIn Set CNA as your preferred source on Google Add CNA as a trusted source to help Google better understand and surface our content in search results. Read a summary of this article on FAST. Get bite-sized news via a newcards interface. Give it a try. Click here to return to FAST Tap here to return to FAST FAST BEIJING: China set its 2026 economic growth target at 4.5 to 5 per cent, marking the first cut since 2023, according to the government work report reviewed by CNA on Thursday (Mar 5).The target was set at “around 5 per cent” in each of the past three years.The move signals a more cautious outlook as the world’s second-largest economy grapples with deflationary pressures, a protracted property downturn and heightened trade tensions with the United States.Chinese Premier Li Qiang is set to deliver the government work report shortly at the opening session of the National People’s Congress (NPC).China’s economy grew 5 percent in 2025, one of the slowest rates in decades according to official data released in January, reaching more than 140 trillion yuan (around US$20.3 trillion) - as officials struggled to overcome persistently low consumer spending and a debt crisis in the country's property sector.This year carries added significance as the country embarks on its ambitious 15th Five-Year Plan, a blueprint that will set policy priorities and shape economic strategies through 2030.“Beijing will stay the course with Xi’s agenda of slower but more secure growth, focused on technological self-reliance and tighter political control,” Neil Thomas, a fellow on Chinese politics at the Asia Society Policy Institute's Center for China Analysis, previously told CNA.Deflationary pressures have gripped China’s economy - underscoring challenges facing policymakers.The producer price index fell 1.4 per cent in January from a year earlier, its 40th consecutive month of contraction, though the pace of decline has eased from the 2.6 per cent drop recorded for all of 2025. Subscribe to our Chief Editor’s Week in Review Our chief editor shares analysis and picks of the week's biggest news every Saturday. This service is not intended for persons residing in the E.U. By clicking subscribe, I agree to receive news updates and promotional material from Mediacorp and Mediacorp’s partners. Loading Consumer inflation was flat in 2025 - well below the government’s 2 per cent target.Price pressures showed little improvement at the start of this year. The consumer price index rose 0.2 per cent in January from a year earlier, slowing from 0.8 per cent in December.The property sector, once accounting for roughly a quarter of China’s GDP, remains in a prolonged downturn.Real estate investment fell 17.2 per cent in 2025, while commercial housing sales by floor area dropped 8.7 percent.New housing starts are still far below peak levels, observers said, with excess inventory weighing on prices in many Chinese cities. Related: China built houses fast for decades. Why is 'good housing' now the new priority? IN FOCUS: 'Buying time' - why China’s housing prices keep falling a year after big bang stimulus Externally, trade tensions continue to cast a shadow.US tariffs on Chinese goods average around 34 per cent, according to the Congressional Research Service - down from higher levels after the Supreme Court struck down levies imposed under emergency powers on Feb 20, but still elevated amid a fluid trade environment ahead of President Trump's planned visit to Beijing from Mar 31 to Apr 2.Exporters have rerouted shipments to emerging markets, the European Union, Africa and Southeast Asia.China’s goods trade surplus hit a record US$1.2 trillion in 2025. Source: CNA/xy(ht) Newsletter Week in Review Subscribe to our Chief Editor’s Week in Review Our chief editor shares analysis and picks of the week's biggest news every Saturday. Newsletter Morning Brief Subscribe to CNA’s Morning Brief An automated curation of our top stories to start your day. 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