Why China cut its GDP growth target to 4.5-5% as risks mount in 2026

China has lowered its 2026 growth target to 4.5-5%, the lowest since 1991, as weak domestic demand, property sector troubles and rising global tensions add uncertainty to the nation

China lowered its annual economic growth target to a range of 4.5-5 per cent, marking the weakest expansion goal set by Beijing since 1991, CNBC reported. The move reflects growing uncertainty both within the country and in the global economy.

 

The new target was announced during China’s biggest annual political gathering, known as the “two sessions”, where leaders also shared early details of the country’s upcoming 15th Five-Year Plan.

 

Why China lowered its growth target

 

Officials said they decided to give policymakers flexibility in a year marked by rising uncertainty. Danyang Shen, who led the team that prepared the economic report, said the new target range would allow China to respond to changing global conditions, the news report said.

 

 

He said policymakers were aware that the global situation had become more unpredictable and warned that unforeseen challenges could emerge during the year. According to him, recent global developments have clearly shown that economic risks could increase beyond expectations.

 

The uncertainty is already visible. Only a few months into 2026, China faces several external challenges, including tensions in West Asia that could affect global energy supplies.

 

The ongoing US-Israel conflict with Iran, an important oil supplier to China, has raised concerns about disruptions to Beijing’s energy imports. At the same time, the removal of Venezuelan leader Nicolas Maduro has added further uncertainty for China, which also imports oil from Venezuela.

 

The news report stated that Chinese authorities asked major state-owned oil refiners to temporarily halt exports of diesel and gasoline amid concerns about possible supply disruptions.

 

Geopolitical tensions have also cast doubt over whether a planned meeting between Donald Trump and Xi Jinping later this month will proceed.   

 

Domestic economic challenges

 

Apart from global pressures, China is also struggling with weak domestic demand and slowing investment.

 

During his presentation at the two sessions, Chinese Premier Li Qiang acknowledged that US tariffs were affecting the economy. He also highlighted the difficulties many businesses are facing and noted that several local governments remain under financial stress.

 

Some regions are reportedly experiencing cash shortages severe enough to delay salary payments to public employees.

 

Consumer prices in China were largely unchanged last year, compared with the government’s earlier goal of around 2 per cent inflation. 

 

Jobs remain a key concern

 

Despite lowering the growth target, the government kept other economic goals largely unchanged from last year.

 

China aims to create 12 million new urban jobs in 2026 while keeping the urban unemployment rate at around 5.5 per cent. But unemployment remains a major worry, especially among young people. The country’s youth unemployment rate stood at 16.3 per cent in January, while the overall jobless rate averaged 5.2 per cent in 2025, the news report said.

 

Tech push continues as property struggles

 

China’s property sector, once a major driver of growth, continues to struggle. Yet the government’s new plans to support the sector remain largely similar to those announced last year.

 

At the same time, Beijing is continuing its push for technological self-reliance. Over the next five years, the government plans to increase investment in scientific research and improve conditions for innovation in areas such as artificial intelligence, robotics and electric vehicles.

 

However, new industries have so far been unable to fully offset the slowdown in traditional sectors.

 

The news report, citing data from Rhodium Group, stated that emerging industries like artificial intelligence and electric vehicles added only 0.8 percentage points to China’s GDP between 2023 and 2025. In contrast, traditional sectors such as real estate saw a combined decline of six percentage points during the same period.   

 

Exports may determine growth

 

Economists say exports will play a crucial role in determining whether China meets its growth goal.

 

For 2026, China plans to issue 1.3 trillion yuan ($188.5 billion) in ultra-long-term special treasury bonds— the same amount as last year. The government will also allocate 250 billion yuan for a consumer goods trade-in programme, slightly lower than the 300 billion yuan spent in 2025, the news report said.

 

The news report quoted Jeremy Stevens, an Asia economist at Standard Bank, as saying that the strategy suggests the world’s second-largest economy is moving away from aggressive crisis-style stimulus and trying to preserve policy space for the years ahead.