China targets lowest growth rate since 1991 as economy struggles to stay afloat

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 global uncertainty.

This year, China will aim for 4.5% to 5% GDP growth “while striving to do better,” said Premier Li Qiang, China’s No. 2 official, in a “work report” presented at the Great Hall of the People in Beijing during the opening of the National People’s Congress, China’s biggest political event of the year.

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

“Although we are aware of what we have achieved, we are also clear about the difficulties and challenges we are facing,” Li said in his over an hour speech, where he read most of the 35-page report.

Thousands of delegates have gathered in Beijing for the National Congress, where the ruling Communist Party sets economic goals, sets policies and sets its tone for the rest of the world. The event, presided over by Chinese leader Xi Jinping, is tightly scripted and almost predetermined to show stability-oriented leadership.

It comes weeks before President Donald Trump visits China for a meeting with Xi where both leaders will try to extend a fragile trade deal. The highly anticipated meeting has been further complicated by US-Israeli strikes on Iran, which has close ties to Beijing.

China is trying to rebalance its foreign-dependent economy by boosting domestic demand while grappling with structural problems, including a lingering commodity slump, industrial overcapacity and rising domestic government debt.

It is also investing heavily in advanced technologies such as artificial intelligence and robotics as it competes with the US for global dominance in those industries.

Li said the government will introduce economic policies that are “anti-US tariffs,” a stark contrast since Trump started a trade war with China when he returned to office last year. Although China’s exports to the US have fallen sharply under the tariffs, it has sold more products elsewhere in the world, and had a record high of nearly $1.2 trillion in sales last year.

Defense spending will increase 7% to more than $275 billion, according to a separate government budget report, down from 7.2% last year and roughly in line with recent years. China, which recently saw a major purge of senior military officials, aims to modernize the military by 2035 amid rising tensions in the region, which includes Beijing’s so-called Taiwan island.

“We will make strong gains 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 wants to project confidence in the face of uncertainty and pressures. But the picture is complicated by the war with Iran, China’s long-time strategic partner.

China has been Iran’s heavily sanctioned utility, buying 80% of its crude oil imports at a deep discount. But they account for about 13% of China’s total oil imports and are easily replaced.

Beijing is particularly concerned about the Strait of Hormuz, a narrow shipping lane that Iran has effectively blocked in retaliation for US-Israeli strikes. China, the world’s largest energy importer, relies on the crisis 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 quickly absorb a supply shock, the widening conflict threatens its economic interests in the Middle East.

Iran is China’s second ally in two months to be targeted by the US, after the sudden arrest of Venezuelan President Nicolás Maduro in January. Beijing has condemned the strikes on Iran, as it has done with the US attack on Venezuela, but is unlikely to offer more than verbal support.

Stability amid international turmoil is the main theme of the Chinese leadership, which favors a “mixed world” over the one dominated by the US. But Beijing is also determined to maintain stability in its relations with Washington, which means that it is unlikely to allow Iran to delay or interfere with Trump’s visit to China, which the White House says will start on March 31.

In his speech, Li spoke of the “good results” from the five rounds of US-China trade talks and said that economic and trade cooperation between the world’s two largest economies is “at a stable level.”

China’s economic systems are grappling with an aging and rapidly shrinking population, as officials prioritize more marriages and a higher fertility rate in the decade after ending the controversial one-child policy. The country of 1.4 billion people is facing the same demographic crisis as the US and many other countries, where young people are delaying marriage and starting families or deciding not to have children at all.

Li proposed building a “childbirth-ready society” in the next five years, with reforms in education and healthcare. Many young people in China complain that the cost of raising children is too high and that job opportunities are too few.

With more than one-fifth of its population over 60 years old, China is trying to improve services on the other side of the age spectrum with efforts to strengthen the so-called silver economy. Li said the government will expand sports programs and increase the number of beds in nursing homes.