China Hits 5% Growth Target in 2025

China will step up state backing to expand capacity and upgrade quality in the service sector, as it deepens reforms, taps technology, and broadens opening-up to drive growth. The National Development and Reform Commission said Tuesday that Beijing will also sustain support for higher-end manufacturing and efforts to improve living standards. New guidelines aim to grow the service sector to CNY 100 trillion by 2030, focusing on narrowing supply-demand gaps, expanding service provision, and fostering new growth drivers, particularly in services trade. Further, authorities will strengthen producer services through an “AI plus software” push to spur new models and upgrade industrial software. In consumer services, the focus will be on richer cultural and tourism offerings, new consumption scenarios, and tighter regulation to meet rising demand.

China posted a solid start to 2026, with key activity indicators exceeding expectations in the combined January–February period, according to the National Bureau of Statistics. Industrial output and retail sales both grew faster than forecast, highlighting momentum in manufacturing and consumer spending. Fixed-asset investment also surprised on the upside, rising 1.8% against market calls for a 0.4% decline. Meantime, the surveyed jobless rate averaged 5.3%, unchanged from the same period a year earlier, suggesting broadly stable labor market conditions. Despite the upbeat data, the agency cautioned that challenges remain. It warned of intensifying external pressures, elevated geopolitical risks, and persistent domestic structural issues. Some enterprises continue to face operational strains amid the country’s economic transition. The statistics bureau stressed that policymakers must balance sustaining growth momentum with strengthening resilience in an uncertain global environment.

China set its 2026 economic growth target at 4.5%–5%, the lowest level goal since 1991, and after keeping an “around 5%” target for the past three years. During the opening of the annual legislative session Thursday, Premier Li Qiang said Beijing aims to sustain momentum after the economy met its 2025 target, helped by resilient exports despite trade tensions with the U.S. To underpin growth, Beijing will keep the fiscal deficit at 4.0% of GDP and set a consumer inflation target of around 2.0%, signaling efforts to ward off deflation after prices were flat last year amid weak demand. Stabilizing employment remains a priority, with plans to create 12 million urban jobs and cap the jobless rate at 5.5%, unchanged from 2025. In addition, local governments will be allowed to issue CNY 4.4 trillion in special-purpose bonds to fund investment projects. At the same time, CNY 1.3 trillion of ultralong treasury bonds will also be issued, matching last year’s quota to reinforce fiscal support.