China's annual parliament meeting is expected to accommodate slightly slower economic growth in 2026, opening the door for more efforts to curb industrial overcapacity and rebalance the export-reliant economy.
Most analysts expect Premier Li Qiang's report on 5 March, the first day of the gathering, to announce a growth target of between 4.5 per cent and 5 per cent, and a pledge to boost both consumption and investment in high-tech industries.
China's 15th five-year plan, which sets strategic objectives and policies for 2026–30 and will be released the same day, is expected to reaffirm the dual goals.
"Policymakers will step up efforts to spur consumption while continuing to stress tech-driven new productive forces," said a policy adviser who expects the target to shift to a range, speaking on condition of anonymity due to the topic's sensitivity.
China’s consumer sector stuck in the slow lane
This dual pledge is decades old but Beijing has been far more successful in expanding its vast industrial capacity than growing the consumer sector. China has become a manufacturing powerhouse that dominates strategic supply chains, giving it leverage in its intensifying rivalry with the US and its allies.
China's 5 per cent growth last year was largely achieved through a $US1.2 trillion ($A1.7 trillion) trade surplus, while domestic consumption lagged.
This growth model has fuelled high levels of debt, ill-directed investment, deflationary pressures and industrial overcapacity.
But it is hard for Beijing to completely give it up at a time of heightened geopolitical tensions that call for a higher degree of self-sufficiency in key industries such as semiconductors and aircraft - where China is still catching up with the US.
A more flexible target
A more flexible growth target would give policymakers room to pursue some painful structural reforms, such as accelerating efforts started last year to curb industrial capacity and contain price wars in various sectors.
Expectations that Beijing may set this year's growth target as a range rather than a single number came after about two thirds of China's provincial governments downgraded their own ambitions, even if in some cases that only meant shifting wording from 'above' to 'around.'
Guangdong, the country's largest provincial economy, set its 2026 growth target at 4.5 to 5 per cent, down from "around 5 per cent" in 2025. Jiangsu, the second-largest province, set a 5 per cent target, compared with "above 5 per cent" last year.
Beijing is expected to keep the budget deficit at 4 per cent of GDP, with bond issuance plans similar to last year.
The US Supreme Court's decision in February to strike down President Donald Trump's "reciprocal tariffs" imposed in 2025, including on China, reduced the need for more sizeable stimulus.
