China is all set to start its big policy meeting. What are the key announcements?

BEIJING – China’s top policymakers will release growth targets and stimulus plans for the year at an annual parliament meeting starting Wednesday.

The so-called “two sessions” of the gathering will include a consultative congress that will begin later in the day and a National People’s Congress that will open on Thursday. Chinese Premier Li Qiang is set to announce a series of economic targets at the NPC, which were largely decided at the December meeting.

At an upcoming parliament session this year, policymakers are expected to release details of a new five-year development plan, the 15th program in China’s modern history. Investors will look for clues about how Beijing intends to achieve its domestic technology ambitions.

These goals mark the final step towards China’s 2035 goals, which aim to achieve technological self-sufficiency.

Senior Chinese leaders, including top diplomat Wang Yi, and heads of economic and finance ministries usually address the press in two sessions. The gathering usually lasts for a week and is expected to conclude on March 11 this year.

Asia Society analysts noted that China’s anti-corruption campaign has reduced the number of delegates attending two sessions this year.

Here’s what economists expect Premier Li to announce on Thursday:

Several Chinese local governments have already scaled back their growth ambitions to 2026, signaling that Beijing may follow through with the national target.

According to the Asia Society, the below 5% growth target is the lowest on record and has been below “around 5%” for the past three years. China did not set a GDP target for 2020 due to the pandemic.

“A slightly lower target would give policymakers more room to prioritize structural reform and improve data quality,” economists at the Economist Intelligence Unit said in a note last week, forecasting 4.6% growth.

However, Morgan Stanley analysts see a “low probability” of Beijing setting a smaller growth target, given that policymakers typically set GDP ranges rather than single-digit targets for periods of major economic stress. The agency pointed out that 2026 is the first year of China’s “15th Five-Year Plan”, which requires faster growth to underpin confidence.

Such a target is consistent with last year, which marked a rare expansion of government spending relative to GDP.

According to data accessed through Air Information, the 4% deficit set for 2025 is the highest on record dating back to 2010. The previous high was 3.6% in 2020.

China’s policy announcements will be scrutinized for details of consumer stimulus, such as expanding subsidies on trade and any increased support for a struggling property market. The two sessions will shed light on Beijing’s thinking about the impact of US trade tensions and the developing conflict in the Middle East.

The world’s second-largest economy faces persistent challenges at home.

“There is a wide gap between Beijing’s goals (and data measuring economic performance) and the actual capacity of China’s policymakers,” Logan Wright, a partner at US-based research firm Rhodium Group, said in a report on Tuesday.

Wright added that China’s financial system has been lending too much to unproductive local government and state-owned enterprises to keep them from collapsing — and the financing costs are often carried out by the same institutions.

“The net result has been a decline in terms of investment and economic activity at the same rate as the cost of borrowing or financing, while private sector investment remains weak,” he said.