China’s economic ambitions hit limits to growth as its National Congress meets

Beijing — China’s progress in building a modern economy is evident in its kung-fu fighting robots and self-parking cars, the decline in its housing industry is hitting limits, small businesses are suffering and young people are struggling to find jobs.

The gap between Chinese leader Xi Jinping’s high-tech, artificial intelligence-driven ambitions and the harsh realities of slow growth is the backdrop for the annual meeting of the National People’s Congress, the country’s largely ceremonial national legislature, which begins Thursday.

At the meetings, which will draw nearly 3,000 delegates to Beijing, top leaders will set China’s annual growth target and Congress will approve a five-year blueprint of policy priorities until 2030.

“What we see is a tradeoff between whether it’s going to be industrial and tech or looking after domestic demand,” said Alexander Davey, an analyst at the Mercator Institute for China Studies. “These are two priorities that Xi Jinping is juggling right now.”

In the southern Chinese city of Guangdong, families cut back on big purchases during last month’s Lunar New Year holiday. Prices of auspicious houseplants like orchids, used as symbols of prosperity and abundance, have been slashed by 40% over last year.

Penny pinching is a complaint small business owners have about hard times.

China has reported reaching economic growth of “around 5%” in 2025, but economists have questioned some of the official data.

Despite US President Donald Trump’s tariff hikes and other disruptions to trade, the relatively robust pace of growth was supported by strong manufacturing as exports picked up.

“Meeting the 2025 growth target is hardly assured as China’s economy loses growth momentum, with growing imbalances and a surge in export-driven growth papering enormous structural problems,” said Ishwar Prasad, professor of economics and trade policy at Cornell University.

The downturn in China’s housing market began several years ago, and piecemeal efforts to revive the industry have made only modest progress. Dozens of property developers defaulted on their loans as authorities cracked down on overdue loans. With overall house prices falling 20% ​​or more from 2021, recovery remains elusive.

The meltdown of one of the country’s biggest industries has eliminated hundreds of thousands of jobs, and with 12.7 million graduates entering the job market this year, more than 16% of young Chinese are unemployed. Some are giving up and dropping out of the rat race or “laying flat.”

Households whose main assets are their homes are wary of spending, weakening consumer demand and long-term efforts to shift the economy to greater reliance on domestic investment.

Congress may bring some new moves to boost social welfare and other supports, measures that economists say are overdue and necessary for sustained, stable growth.

Reliance on exports will help keep China’s economy humming along, at least for now. China has recorded a $1.2 trillion trade surplus in 2025 as exports keep its factories humming. Despite the Sino-US trade war, it shipped more to regions including Europe and Latin America. But it faces pushback from its trading partners.

Under leader Xi, China has prioritized developing advanced technologies such as AI, robotics, computer chips, electric vehicles and renewable energy. Massive state support has companies churning out more EVs, TVs, solar panels and other products than China and its trading partners need.

“To achieve those goals, the government needs to continue providing subsidies and preferential support to high-tech and strategic industries,” said Leah Fahy, China economist at Capital Economics. “(That) will, in turn, continue to fuel higher capacity.”

In a recent report, the International Monetary Fund urged China to cut massive state subsidies and other support for industries that many Western countries say give its companies an unfair advantage over foreign rivals. At the same time, social welfare and other sectors of the economy are lagging behind.

Lawmakers in Congress will approve progress under a 2026-2030 five-year plan focusing on what the ruling Communist Party calls “high-quality development.”

Over the past few decades, booming construction of homes, office buildings, roads, ports and railways has transformed China into a manufacturing superpower. But tech supply chains are narrower and provide fewer jobs. So the trickle down effect is much weaker, said Lin Song, chief economist for Greater China at ING Bank.

“If anything, the more successful so-called industries of the future draw resources away from traditional sectors that provide more jobs and livelihoods for more people,” said Henry Gao, a law professor at the Singapore Management University.

The annual congress is an impressive show. Thousands of delegates fill the Great Hall of the People in central Beijing. A military band performs and representatives of various ethnic groups participate in traditional clothing.

For all the pomp, the meeting is mostly a set piece. Congress lasts just one week and its unanimous votes on the final day formalize decisions made ahead of time by party leaders. It was a show of unity that reaffirmed the policies and direction they had set.

That leadership is centered on one man, Xi, who has consolidated power since taking the helm in 2012. Now 72, he is one of modern China’s most powerful leaders. Some analysts think Xi will emulate Mao Zedong, the revolutionary leader who founded Communist China, and rule for life.

Annual reports presented at the congress are replete with references to the party’s crucial role, with “Comrade Xi Jinping at its center”.

Since rising to power, Xi has redoubled long-standing anti-corruption campaigns, forcing many officials to step down to face investigation and prosecution, including top military brass.

Days before the congress began, the national legislature removed nine military officers from its ranks, extending a years-long military purge. Last month, General Zhang Yuxia, the highest-ranking military member below Xi, was expelled over suspected disciplinary violations.

A report by the Center for Strategic and International Studies think tank suggested that Xi’s actions may weaken China’s military readiness in the coming years, but they are ensuring that the force will be more politically credible in the long run.

Anti-corruption drives have eliminated potential political rivals, and his iron grip on power makes it less likely that other officials will challenge his vision of building China into a self-reliant technology leader and 21st-century global power.

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Chan reports from Hong Kong. AP Business Writer Elaine Kurtenbach contributed from Bangkok.