China targets 2026 economic growth at 4.5-5%, the lowest since the 1990s

JAKARTA, KOMPAS.com — The Chinese government targets gross domestic product (GDP) growth in the range of 4.5 percent to 5 percent for 2026, the lowest since the early 1990s. This target reflects a more cautious approach amid deflationary pressures, weak domestic demand, and trade tensions with the United States. The target is listed in the government work report delivered by Premier Li Qiang at the opening of the annual session of the National People’s Congress (NPC) on Thursday (5 March 2026). In the report, the government lowered the growth target from around 5 percent that had been maintained for the past three years. The new target is also the lowest in modern China’s history, except in 2020 when the government did not set a growth target due to the Covid-19 pandemic. The move comes as the world’s second-largest economy faces pressures ranging from slowing domestic consumption to the impact of global trade tensions.

The inflation target implicitly signals weak domestic demand. In practice, China’s inflation target functions more as an upper bound than a target to be achieved. Throughout 2025, price growth was flat, while core inflation, excluding food and energy, only reached 0.7 percent. This occurred as consumer confidence remained weak and economic activity had not yet fully recovered.

In the government work report, Li Qiang acknowledged that China’s economy faces a range of structural challenges. The situation is also reflected in the performance of several economic indicators. In 2025, retail sales growth in China was only 3.6 percent, while producer price deflation deepened, falling by 2.6 percent from the previous year. Several economists view the lower growth target as reflecting a shift in Beijing’s policy approach. Tianchen Xu, senior economist at the Economist Intelligence Unit, said the target is realistic and signals a shift in policy orientation. He said Beijing is no longer viewing high growth as an end in itself, because it could prompt local officials to push for massive, inefficient investment projects that do not provide much economic benefit and to manipulate data. This approach is also in line with the government’s strategy to promote high-quality development, which emphasises innovation, technology, and economic transformation. ‘The current growth rate is naturally lower than five or ten years ago, but that is normal and healthy,’ said Dewit, quoted from China Daily. This article is part of Lestari KG Media, an initiative to accelerate Sustainable Development Goals. More details.