China sets lowest economic growth target since 1991

China has cut its annual economic growth target to a range of 4.5 percent to 5 percent, the lowest expansion target since 1991, as it grapples with challenges both at home and abroad.

This is the first time the target has been lowered since it was reduced to “around 5%” in 2023. No target was set in 2020 due to the pandemic.

The details were unveiled at China’s biggest political gathering, known as the “two sessions”, alongside the release of some details of the 15th Five-Year Plan for the world’s second-largest economy.

Beijing aims to reshape its economy in the face of problems including low consumption, a shrinking population, a lingering real estate crisis, global trade tensions and an energy crisis due to the war in Iran.

A Chinese analyst told the BBC that the lower target gives China “more room to manage the economy” without being forced to make huge financial commitments just to meet a specific target.

“China has used flexible targets before, particularly during the pandemic, but this is not the norm,” added Jason Bedford of the National University of Singapore.

The two-session event, which began Wednesday and typically lasts at least a week, brings together the country’s leaders for back-to-back meetings.

Details of China’s gross domestic growth (GDP) target and its targets under its latest five-year plan were included in a 46-page report released by Premier Li Qiang, seen by the BBC.

The full text of the plan, which will define China’s economic development goals until 2030, will be voted on on the closing day of the meeting.

It is expected to be published by state media in a day or two.

Li told delegates the five-year plan will include investments in innovation, high-tech industries, scientific research and more efforts to boost household consumption.

His comments highlight Beijing’s concerns that weak domestic consumption makes the country too dependent on exports, as well as its ambitions to modernize the country’s manufacturing industries.

The report outlines more than 100 major projects over the next five years to develop China’s industrial capacity, with a focus on science and technology, transportation and energy.

China aims to carry out a green energy campaign, reducing carbon emissions and improving environmental protection, Li wrote.

The country will also build a “childbirth-friendly society” by addressing concerns in employment, education and health care, the report said.

China faces an aging population and a falling birth rate, complicating Beijing’s plans to boost its economy.

In January, official figures showed that China achieves 5% economic growth target for 2025 in its entirety. But Beijing also said economic expansion slowed to 4.5% in the last three months of the year, weighed down by weak domestic spending and a long-running real estate crisis.

More than two-thirds of Chinese provinces have scaled back their growth ambitions, either by lowering their targets or changing language from a target above a certain rate to one “around” that level.

Zhou Zheng, a policy analyst at China Macro Group, said Beijing’s new growth target reflects its “realistic” nature as it deals with complex domestic challenges and a tough global business environment.

China’s economic growth remains a “great achievement” as it simultaneously addresses major problems that are deeply intertwined and will take time to resolve, Zhou said.

But Ning Leng, a researcher at Georgetown University, said China’s growth figures should be taken with “a grain of salt” because other data suggests a weaker economic situation.

The real estate market once accounted for nearly a third of China’s economy and was a key revenue source for local governments, many of which are now heavily in debt.

The sector’s problems have also led to layoffs and pay cuts across the country.

But that means China has become particularly reliant on exports to fill gaps, which is a weakness the United States can resent, Ning said.

Tariffs imposed by US President Donald Trump have put additional pressure on China’s export-dependent economy.

The country responded by devoting enormous resources to redirecting trade to other countries to ensure its products could be sold, thereby supporting its manufacturing sector, Ning said.

Trump is expected to visit China in April and meet with President Xi Jinping for their first face-to-face meeting this year.

Meanwhile, the US-Israeli war on Iran means Beijing has lost two key sources of cheap oil this year.

They have also been unable to access Venezuelan oil since the United States took over President Nicolas Maduro in January.

But Beijing has stressed that it is much less dependent on fossil fuels, having been transitioning for several years to renewable energy.