BEIJING – China on Thursday announced its lowest growth target in 35 years as the world’s second-largest economy faces challenges at home and growing uncertainty around the world.
This year, China targets GDP growth of 4.5% to 5%, “while trying to get better in practice,” China’s no. 2 Official Premier Li Qiang said in a “work report” delivered at Beijing’s Great Hall of the People at the opening session of China’s biggest political event of the year, the National People’s Congress.
That figure, the country’s lowest since 1991, compares with the 5% target achieved last year and is the first formal downgrade since 2023. It is an acknowledgment that China’s growth is slowing as the model that has supercharged its economy for decades begins to reach its limits.
“While recognizing our achievements, we also see clearly the difficulties and challenges we face,” Li said in his more than hour-long speech, during which he read a 35-page report.
Thousands of delegates gather in Beijing for the National People’s Congress, where the ruling Communist Party sets economic goals, formulates policies and signals its voice to the rest of the world. The event, overseen by Chinese leader Xi Jinping, is tightly scripted and perfectly preordained to showcase a leadership hyper-focused on stability.
It comes weeks before President Donald Trump is set to visit China for a meeting with Xi, where the two leaders are trying to expand a fragile trade deal. The highly anticipated meeting was further complicated by US-Israeli attacks on Iran, which has close ties to Beijing.
China is trying to address structural problems, including a long-term asset slump, industrial overhang and local government debt, by boosting domestic demand to rebalance its export-dependent economy.
It is investing heavily in cutting-edge technologies such as artificial intelligence and robotics as it competes with the United States for global dominance in those industries.
Li said the government would set economic policies “against US tariffs,” a contrast since Trump returned to office last year and launched a trade war with China. Although China’s exports to the US have fallen sharply under the tariffs, it sells more products elsewhere in the world and ran a record trade surplus of nearly $1.2 trillion last year.
According to a separate government budget report, defense spending will increase by 7% to more than $275 billion, up from 7.2% last year and roughly in line with recent years. China, which has recently seen a large-scale purge of senior military officers, aims to modernize its military by 2035 amid rising Beijing-Taiwan tensions in the region.
“We will make solid gains in military training and combat readiness, and accelerate the development of advanced combat capabilities,” Li said in his speech.
With a slightly lower growth target than widely expected, China is trying to project confidence in the face of uncertainty and pressures. But the picture is complicated by the war in Iran, China’s long-time strategic partner.
China is a lifeline for heavily sanctioned Iran, buying 80% of its crude oil imports in exchange for major concessions. But they account for only 13% of China’s total oil imports and are easily replaceable.
Beijing is increasingly concerned about the Strait of Hormuz, a narrow shipping lane that Iran has effectively closed in retaliation for US-Israeli attacks. China, the world’s largest energy importer, relies on the strait for a third of its oil imports and a quarter of its gas.
While China has spent years building up its reserves, analysts say this will offset immediate supply shocks, as a widening conflict threatens its economic interests across the Middle East.
Iran is the second Chinese partner to be targeted by US military action in two months, following the surprise capture of Venezuelan President Nicolas Maduro in January. Beijing has criticized attacks on Iran, as has the US attack on Venezuela, but is unlikely to offer more than rhetorical support.
Stability amid international turmoil is a key issue for China’s leadership, which favors a US-dominated “multipolar world” but Beijing is keen to maintain stability in its relationship with Washington, meaning it will not allow Iran strikes to delay or derail Trump’s visit to China, which begins on March 31, the White House said.
In his speech, Li spoke of “positive results” from five rounds of US-China trade talks and said economic and trade cooperation between the world’s two largest economies is “on a more stable footing”.
China’s economic plans have been complicated by its aging and rapidly shrinking population, with officials prioritizing more marriages and higher birth rates a decade after ending the controversial one-child policy. The country of 1.4 billion people faces the same demographic crisis as the US and many other countries, with young people increasingly delaying marriage and starting families or choosing not to have children.
Li proposed building a “maternity-friendly society” over the next five years with changes in education and health care. Many young people in China complain that the cost of raising children is too high and job opportunities too few.
With more than a fifth of its population over 60, China is trying to improve services at the other end of the age spectrum with initiatives known as the silver economy. Li said the government would expand sports programs and increase the number of beds in senior care facilities.
