China’s government has set an economic growth target of “around 5%” for 2026, the lowest goal in decades, signaling a shift in priorities toward technological self-reliance and higher-quality growth, according to state media reports confirmed Friday.
The move comes as the world’s second-largest economy grapples with significant headwinds, including a protracted property sector crisis, mounting local government debt, and sluggish domestic consumption. While the 5% target is still ambitious, it represents a notable deceleration from the average annual growth rate of over 6% recorded over the past two decades.
The decision to lower the growth target reflects a broader strategic recalibration within Beijing, prioritizing innovation and technological advancement as key drivers of future economic expansion. Norbert Meyring, head of Automotive and Industrial Manufacturing, ASPAC Region of KPMG, stated that China’s leadership in artificial intelligence, evidenced by over half of global AI patents originating from the country, signals a “strategic pivot toward technology-led growth.”
Clean energy investment is playing a significant role in this shift. In 2023, clean energy contributed a record 11.4 trillion yuan ($1.6 trillion) to China’s economy, accounting for all of the growth in investment and a larger share of economic growth than any other sector. Investment in solar power, electric vehicles (EVs), and batteries were the main focus of these investments. Clean-energy investment rose 40% year-on-year to 6.3 trillion yuan ($890 billion), representing almost as large an investment as total global investments in fossil fuel supply in 2023.
The emphasis on technology is too evident in the rapid rollout of 5G infrastructure. Over 4 million 5G base stations were deployed across China in 2024 alone, providing crucial infrastructure for the development of AI and other emerging industries. The country is also making significant progress in areas such as speech recognition, image processing, intelligent manufacturing, and autonomous driving, positioning itself at the cutting edge of technological innovation.
The change in economic strategy is not without its challenges. The real estate sector, a major pillar of China’s economic growth for years, has been shrinking for the second consecutive year. This downturn, coupled with high levels of local government debt and weak consumer spending, has created a complex economic environment.
Despite these challenges, Chinese officials maintain that the country’s economic fundamentals remain strong. The government is focused on accelerating smart manufacturing and green energy adoption to drive down costs, set new efficiency benchmarks, and redirect supply chains. The World Economic Forum, held in Tianjin in June 2025, underscored how innovation is reshaping China’s economic resilience.
As of Friday, no further details regarding specific policy measures to achieve the 5% growth target have been released by the National Bureau of Statistics.
