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China lowers economic growth target to 4.5%-5%
China has set its annual economic growth target at 4.5% to 5%, the lowest range since 1991, as it navigates domestic and global headwinds. The adjustment was announced during the "two sessions," the country's largest annual political gathering, marking the first reduction since 2023, when the goal was "around 5%."
Key factors behind the shift
Beijing's decision reflects a confluence of challenges, including sluggish domestic consumption, a declining population, a prolonged property sector crisis, and escalating global trade tensions. The Iran conflict has also disrupted energy supplies, adding pressure on the world's second-largest economy.
Jason Bedford, an analyst at the East Asian Institute, told the BBC the lower target provides "more room to manage the economy" without the pressure of meeting a rigid numerical goal. While China has used flexible targets during crises like the pandemic, such adjustments remain uncommon.
Five-Year Plan priorities unveiled
A 46-page report by Premier Li Qiang, reviewed by the BBC, outlined China's 15th Five-Year Plan, which will guide economic development through 2030. The full document, set for approval on the gathering's final day, will likely be published by state media within days.
Li emphasized investments in innovation, high-tech industries, and scientific research, alongside efforts to stimulate household spending. The plan includes over 100 major projects to expand industrial capacity, with a focus on technology, transportation, and energy.
"Weak domestic consumption leaves China overly reliant on exports," Li said, underscoring the need to upgrade manufacturing and reduce dependence on foreign demand.
Tech and green energy ambitions
Beijing aims to position itself as a global leader in artificial intelligence, integrating AI tools across critical sectors. The plan also prioritizes a green energy transition, targeting reduced carbon emissions and enhanced environmental protections.
Addressing demographic concerns, the report pledged to build a "childbirth-friendly society," tackling barriers in employment, education, and healthcare amid an aging population and declining birth rates.
Economic realities and skepticism
China met its 5% growth target for 2025 overall, but expansion slowed to 4.5% in the final quarter, dragged down by weak spending and the property crisis. Over two-thirds of provinces have scaled back their growth ambitions, either lowering targets or adopting more cautious language.
Zhou Zheng, a policy analyst at China Macro Group, called the new target "realistic," given the complex domestic challenges and a "difficult global trade environment." However, Georgetown University researcher Ning Leng urged caution, arguing that official figures may overstate economic strength.
The property sector, once a cornerstone of China's economy-accounting for nearly a third of GDP-has triggered layoffs, pay cuts, and local government debt crises. Manufacturing and exports have offset some losses, with China posting a record $1.19 trillion trade surplus in 2025.
Global trade tensions and energy woes
Ning warned that China's export reliance exposes vulnerabilities, particularly as U.S. tariffs under President Donald Trump intensify pressure. Beijing has responded by diversifying trade routes to sustain its manufacturing base.
Energy disruptions have compounded challenges. The U.S.-Israel conflict with Iran and the loss of Venezuelan oil supplies-following the U.S. seizure of President Nicolás Maduro in January-have strained resources. However, China's shift toward renewables has reduced its dependence on fossil fuels.
Diplomatic horizon
Trump is expected to visit China in April for his first face-to-face meeting with President Xi Jinping this year, potentially easing trade frictions or setting the stage for further negotiations.
