BEIJING: China has set its most modest growth target in more than three decades, in a tacit acknowledgment that the model powering the country’s rapid rise for four decades is showing strains.
The goal – a range of 4.5% to 5% – is the first formal downgrade since 2023 and the least ambitious expansion goal since 1991.
While widely anticipated by economists, it carries symbolic weight in a country where growth figures function as political statements as much as economic forecasts.
The shift signals Beijing’s comfort with a slower pace while seeking more sustainable growth drivers to replace debt-fuelled property and infrastructure investment.
A lower target also reduces the pressure on officials to deploy aggressive stimulus despite a volatile global trade environment.
The targets suggest that China “will not be recklessly spending to chase a specific growth level”, said Lynn Song, chief economist for Greater China at ING Bank NV.
“The move will allow for Chinese policymakers to have more flexibility with regards to the 2026 goals.”
Yields on China’s 10-year government bonds initially drifted lower in morning trade as investors reacted to a fiscal plan that kept debt quotas and budget deficit targets steady, before paring the move to be little changed.
The offshore yuan rose 0.1% against the US dollar, extending a rally from the previous session, after the People’s Bank of China set the currency’s fixing to the strongest since 2023.
Premier Li Qiang officially announced the goal in a speech in Beijing yesterday.
He acknowledged the “formidable” task of transforming the economy and the “acute” imbalance while expressing confidence in the country’s long-term growth potential.
“In proposing these targets, we have considered the need to leave some room for structural adjustments, risk prevention and reform in the opening year of this five-year plan period, so as to lay a solid foundation for delivering better performance in the coming years,” he said.
The report to the national parliament also keeps fiscal support this year roughly at the same level while lowering the amount of subsidies for buying consumer goods.
Government funding for the trade-in programme edged down to 250 billion yuan from 300 billion yuan, though the initiative’s impact has already been fading in recent months as a higher base of comparison from earlier kicked in.
Bloomberg economists Chang Shu David Qu and Eric Zhu said: “The lower target reflects pragmatism.
“Policymakers are finally acknowledging structural headwinds and persistent downward pressure across the economy.”
Investors now await details of a draft of the government’s economic programme for the next five years. — Bloomberg
