Chinese provinces set lower growth targets for 2026

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Most Chinese provinces are targeting lower economic growth this year, in what many economists believe is a signal Beijing will set a historically low range of 4.5-5 per cent for its official goal in 2026.

Of the 29 out of China’s 31 province-level areas that have so far announced growth targets, 19 have cut them compared with 2025, according to a tally by the FT.

The central government is scheduled to set its official target for this year at the annual meeting of the National People’s Congress, China’s rubber-stamp parliament, next month.

“The consensus for the 2026 target is now 4.5-5.0 per cent,” said Larry Hu, chief China economist at Macquarie. He said that if Beijing set this target at the NPC meeting, it would signal leaders’ willingness to tolerate a “gradual slowdown” in economic growth.

“The overall reduction in provincial GDP growth targets is the strongest signal yet that Beijing will do the same with the national target,” analysts at consultancy Trivium China said. “Odds are firming for a target of 4.5-5 per cent — replacing the ‘around 5 per cent’ target of the past few years.”

If Beijing does set the lower end of a target range at 4.5 per cent, it would be the lowest official annual GDP target since China’s long economic boom began in the 1980s and would imply a potential slowing from last year.

China’s National Bureau of Statistics said last month that GDP grew 5 per cent in 2025.

Some economists have serious doubts about the reliability of China’s GDP data, but the goals set by the central and province-level governments can have a far-reaching effect on policy, with officials dialling up or down fiscal spending and state bank lending to try to hit the target.

China’s economy has weakened over the past few years because of a property market crisis that has weakened domestic demand as well as a trade war and industrial overcapacity that has deepened deflationary pressures.

But China’s ascent to middle-income country status also meant some slowing was inevitable, economists say.

Goldman Sachs economists said the weighted average of the 2026 GDP targets for the 29 provinces and cities that had so far been announced was 5.1 per cent, down from 5.3 per cent in 2025.

China’s most important cities, Beijing and Shanghai, kept their growth targets unchanged at “around 5 per cent”. But Guangdong, the largest provincial economy, and two other provinces set their targets lower at 4.5-5 per cent and four others put it at 4.5 per cent.

The lowered targets, along with official comments, pointed to a lower national target range, economists said.

In December last year, President Xi Jinping indicated his growing impatience with efforts by lower-level officials to inflate economic performance with vanity projects and excessive spending, signalling a willingness to tolerate slower but more genuine growth. 

Xi said government efforts should be based on facts and “pursuing real and genuine growth without exaggeration, and promoting high-quality and sustainable development”. 

“Those who are unrealistic, hasty, reckless and haphazard in their efforts will be held strictly accountable,” he said, according to state media. 

Economists cautioned that Beijing would not be actively targeting 4.5 per cent growth, but rather setting that level as a possible lower boundary in case of “external shocks”, such as a sudden fall in exports due to turmoil in trade.

Macquarie’s Hu said Beijing would calibrate stimulus policies this year to try to achieve 5 per cent growth in order to get the first year of its new five-year plan period off to a good start.

“If exports retreat sharply, then the government will still step in to stimulate,” he said.

And not all economists agree that the government will set a lower target.

“We think they are probably OK with an official target of ‘around 5’,” said Morgan Stanley chief China economist Robin Xing. This would allow Beijing to signal it wanted a strong start to the five-year growth plan while “providing some cushion for subsequent growth moderations”.

Data visualisation by Haohsiang Ko in Hong Kong