China sets lowest growth target since 1991 as economy struggles to keep momentum

BEIJING — China announced its lowest growth target in 35 years on Thursday, as the world’s second-largest economy grapples with domestic challenges and growing uncertainty around the world.

This year, China will aim for gross domestic product growth of 4.5 percent to 5 percent “while striving for better results in practice,” Premier Li Qiang, China’s second-ranking official, said in a “work report” delivered at the Great Hall of the People in Beijing during the opening session of the National People’s Congress, China’s biggest political event of the year.

The figure, the country’s lowest since 1991, compares with the 5% target reached last year, and is the first official cut since 2023. It is an acknowledgment that China’s growth is slowing as the model that has energized its economy for decades begins to reach its limits.

“While recognizing our achievements, we are also clear-eyed about the difficulties and challenges we face,” Li said in his more than hour-long speech, during which he read much of the 35-page report.

Thousands of delegates are gathering in Beijing for the National People’s Congress, where the ruling Communist Party sets economic goals, outlines its policies and sets its tone to the rest of the world. The event, overseen by Chinese leader Xi Jinping, is tightly scripted and almost entirely predetermined to showcase leadership hyperfocused on stability.

It comes weeks before President Donald Trump travels to China for a meeting with Xi in which the two leaders will try to extend a fragile trade truce. The highly anticipated meeting was further complicated by US-Israeli strikes against Iran, which has close ties to Beijing.

China is trying to rebalance its export-dependent economy by boosting domestic demand while tackling structural problems, including a prolonged real estate crisis, industrial overcapacity and growing local government debt.

The country is also investing heavily in cutting-edge technologies such as artificial intelligence and robotics, as it vies with the United States for global dominance in these sectors.

Li said the government would implement economic policies “against U.S. tariffs,” which have varied wildly since Trump launched a trade war with China upon returning to power last year. Although Chinese exports to the United States fell precipitously under the tariffs, the country sold more products elsewhere in the world and ran a record trade surplus of nearly $1.2 trillion last year.

Defense spending will rise 7 percent, to more than $275 billion, according to a separate government budget report, down from 7.2 percent last year and roughly in line with recent years. China, which recently experienced a large-scale purge of senior military officers, aims to modernize its army by 2035 amid growing tensions in the region, particularly over the island of Taiwan, claimed by Beijing.

“We will make solid progress in military training and combat readiness and accelerate the development of advanced combat capabilities,” Li said in his speech.

Even with a slightly lower growth target, which was widely expected, China seeks to project confidence in the face of uncertainty and pressure. But the situation is complicated by the war in Iran, China’s long-standing strategic partner.

China has been a lifeline to heavily sanctioned Iran, buying 80% of its crude oil imports in exchange for a deep discount. But they represent only about 13% of China’s total oil imports and are easily replaced.

Beijing is more concerned about the Strait of Hormuz, a narrow shipping route that Iran has effectively closed in retaliation for U.S.-Israeli strikes. China, the world’s largest energy importer, depends on the strait for a third of its oil imports and a quarter of its gas.

Although China has spent years building up its reserves, which analysts say could offset immediate supply shocks, a protracted conflict threatens its economic interests across the Middle East.

Iran is the second Chinese partner in two months to be targeted by US military action, following the surprise capture of Venezuelan President Nicolás Maduro in January. Beijing has criticized the strikes on Iran, as has the US raid in Venezuela, but is unlikely to provide support beyond rhetoric.

Stability amid international turbulence is a key theme for China’s leaders, who favor a “multipolar world” rather than one dominated by the United States. But Beijing is also keen to preserve the stability of its relationship with Washington, meaning it is unlikely to let Iranian strikes delay or derail Trump’s visit to China, which the White House says will begin on March 31.

In his speech, Li spoke of the “positive results” of the five rounds of trade negotiations between the United States and China and said that economic and trade cooperation between the world’s two largest economies rested on “a more stable foundation.”

China’s economic plans are complicated by its rapidly aging and shrinking population, with authorities prioritizing more marriages and a higher birth rate a decade after ending the controversial one-child policy. The country of 1.4 billion faces the same demographic crisis as the United States and many other countries, with young people increasingly postponing marriage and starting families, or even deciding not to have children at all.

Li proposed building a “childbirth-friendly society” over the next five years, with changes in education and health care. In China, many young people complain that the costs of raising children are too high and job prospects are too poor.

With more than a fifth of its population aged over 60, China is also trying to improve services at the other end of the age bracket with initiatives aimed at strengthening the so-called silver economy. Li said the government would expand sports programs and increase the number of beds in elderly care facilities.