China has lowered its official GDP growth target for 2026 to a range of 4.5–5.0%, marking a slight softening from the previous 'around 5%' target maintained over the past three years. This adjustment signals a tolerance for slower expansion while maintaining long-term ambitions, as outlined in the government work report, which reiterates the goal of doubling per capita GDP by 2035 compared to 2020—a key objective set by President Xi Jinping [1]. ING’s Chief Economist for Greater China, Lynn Song, notes that fiscal and employment targets remain broadly stable, and ING forecasts GDP growth of 4.6% year-on-year, which falls within the new official range [1].
The shift to a lower growth band is seen as providing policymakers with more flexibility to pursue quality growth, a priority in recent years. The 4.5% threshold represents only a limited slowdown, and China’s longer-term growth ambitions remain unchanged [1]. The government’s stable fiscal deficit and bond issuance targets indicate a degree of restraint, avoiding excessive reliance on extra stimulus to drive growth at the expense of quality. This approach may disappoint some market watchers who had hoped for a stronger fiscal stimulus push [1].
Looking ahead, the trends observed in recent years are expected to continue, with increased focus on moving up the supply chain and improving technological self-reliance. However, a major challenge remains in boosting domestic demand, as domestic confidence is described as tepid and continues to restrain this effort [1].
CONCLUSION
China’s decision to lower its GDP growth target to 4.5–5.0% reflects a shift toward prioritizing quality growth and policy flexibility, while maintaining its long-term economic ambitions. The restrained fiscal stance may temper expectations for aggressive stimulus, and the success of efforts to boost domestic demand remains uncertain. Overall, the market reaction is likely to be mixed, with moderate sentiment and medium impact.