BEIJING — China has announced its lowest growth forecast in 35 years for China as the world’s second-largest economy grapples with problems at home and growing uncertainty around the world.
This year, China will aim for the growth of the domestic product of 4.5% to 5% “this is an effort to do better in performance,” Premier Li Qiang, China’s 2nd president, said in a “work report” given in 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.
This figure, the lowest in the country since 1991, is compared to the 5% target made last year, and is the first reduction since 2023. Accepting that China’s growth is slowing down as the model that has increased its economy for decades begins to come to an end.
“While we know what we have done, we also clearly see the problems and challenges we face,” Li said in his more than hour-long speech, during which he read most of the 35 pages.
Thousands of delegates gathered in Beijing for the National People’s Congress, where the ruling Communist Party sets economic goals, sets policies and expresses its voice to the rest of the world. The event, which was overseen by Chinese President Xi Jinping, was tightly scripted and well-timed to show stability-oriented leadership.
It comes weeks before President Donald Trump is due to visit China for a meeting with Xi where the two leaders will try to expand a trade deal. The much-anticipated meeting was further complicated by the US-Israeli strike on Iran, which has close ties to Beijing.
China is trying to revive its export-dependent economy by increasing domestic demand while addressing structural issues, including a long-term infrastructure deficit, industrial sprawl and rising public debt.
It is also investing heavily in cutting-edge technologies such as artificial intelligence and robotics as it competes with the US for global dominance in those industries.
Li said the government would implement an economic plan “against US tariffs,” a sharp departure from Trump’s trade war with China when he returned to office last year. Although China’s exports to the US fell sharply under tariffs, it sold more products to other countries around the world, and had a record sales increase of about $12 million last year.
Defense spending will increase 7% to $275 billion, according to a separate government budget, up from 7.2% last year and on par with recent years. China, which has recently seen a major purge of military officers, aims to modernize its military by 2035 amid growing tensions in the region, including over the Beijing-claimed island of Taiwan.
“We will make strong progress in military training and combat readiness and speed up the development of combat technology,” Li said in his speech.
Despite the slow growth outlook, which many expected, China is looking to give confidence in the face of uncertainty and pressure. But the picture has been complicated by the war in Iran, China’s long-time partner.
China has been a conduit for heavy sanctions by Iran, buying 80 percent of its crude oil in exchange for a high price. But they only account for 13% of China’s total oil exports and are easily replaced.
Beijing is particularly concerned about the Strait of Hormuz, a narrow shipping lane that Iran effectively closed in retaliation for the US-Israeli attack. China, the world’s largest exporter, relies on the crisis for a third of its oil exports and a quarter of its gas.
Although China has spent years building up its reserves, which analysts say could stave off an immediate shock, the increased conflict threatens economic interests in the Middle East.
Iran is the second Chinese ally in two months to be targeted by US forces, after the mysterious arrest of Venezuelan President Nicolás Maduro in January. Beijing has criticized the Iran strike, as it has the US attack on Venezuela, but is unlikely to offer more than verbal support.
Stability in the midst of global chaos is an important theme for the Chinese leadership, which favors “multinationalism” over the US-dominated one. But Beijing also wants to maintain stability in its relations with Washington, meaning that it is impossible to let Iran delay or disrupt 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 round US-China trade talks and said that the economic and trade relations between the two major economies “were stable.”
China’s economic system has been strained by an aging and shrinking population, with adults marrying more and the birth rate rising a decade after ending the one-child debate. A country with 1.4 billion people is facing a demographic crisis like the US and many other countries, young people are increasingly refusing to marry and start a family or choosing not to have children at all.
Li planned to build a “birth-friendly society” in the next five years, with changes to education and health care. Many young people in China complain that the cost of raising children is high and job opportunities are limited.
With more than a fifth of its population over the age of 60, China is also trying to improve services at the other end of the age spectrum with a development plan called the silver economy. Li said the government will expand sports programs and increase the number of beds in nursing homes.
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