China on Thursday lowered its economic growth target and raised its annual defense budget by 7 percent, touting what it called “remarkable” economic resilience despite a “grave and complex” global environment.
It also unveiled a highly anticipated five-year national strategy focused on supercharging technological dominance as a core national security priority amid its escalating rivalry with the United States.
The figures were announced as thousands of China’s political elite descended on Beijing this week for the opening session of the National People’s Congress — the country’s top annual political gathering, where its largely rubber-stamp parliament convenes to approve major strategic priorities. This year’s meeting comes as Beijing faces mounting economic and security headwinds, including weak domestic consumption and shocks to its geopolitical partnerships after U.S.-backed decapitations of governments in Iran and Venezuela.
Outlining China’s priorities for 2026, Chinese Premier Li Qiang said Beijing was preparing a buffer from the bruising effects of U.S. President Donald Trump’s tariff war and vowed a “crackdown” on forces supporting Taiwanese independence. Li also promised “significant progress” in military modernization ahead of the People’s Liberation Army’s centenary in 2027 — pledging that the anti-corruption purges that have roiled the military’s top ranks will “continue to deepen.”
“What we achieved in 2025 was indeed hard won. Rarely in many years have we encountered such a grave and complex landscape, where external shocks and challenges were intertwined with domestic difficulties and tough policy choices,” said Li, speaking in front of the gathered congress on Thursday.
China’s annual “Two Sessions” congress and the unveiling of its latest five-year plan — the 15th since Beijing adopted Soviet-style planning cycles in the 1950s, and a blueprint for policy through 2030 — come at a pivotal moment for its leader, Xi Jinping. The country is navigating increasingly volatile relations with the U.S. while pressing toward major military modernization goals, including building a force capable of invading Taiwan by 2027.
The country’s new national road map comes as Xi is set to meet Trump for a three-day summit in Beijing later this month that could set the tone for relations between the two superpowers through the next U.S. presidential election. The plan, analysts say, sends strong signals that China is looking to stabilize ties with Washington while accelerating efforts to insulate its economy from an increasingly volatile White House.
“The plan is best read as the Party preparing for a long-term contest under persistent U.S. pressure. The through line is resilience: reduce choke points, harden supply chains, and keep the economy functioning through external shocks. In other words, keep battening down the hatches,” said Craig Singleton, senior director of the China program at the Washington-based Foundation for Defense Democracies think tank.
Beijing set an economic growth target of 4.5 percent to 5 percent for 2026 — down from 5 percent last year and its lowest in almost 35 years — as it grapples with weak domestic demand, inflated local government debt and a prolonged property crisis, as well as shock waves from Trump’s trade war.
“The international economic and trade environment underwent drastic changes as unilateralism and protectionism abruptly escalated, market expectations were hit by frequent volatility, and China’s foreign trade came under considerable pressure,” Li said.
He pointed to successes in five rounds of China-U.S. talks in the past year — culminating in a meeting between Xi and Trump in South Korea last year — in which the two leaders agreed to pause a rapidly escalating tit-for-tat trade battle that saw Beijing shutter U.S. access to its rare-earths monopoly and U.S. tariffs on Chinese goods reach an unprecedented 145 percent.
Beijing will be looking to extend that truce following the summit later this month, while the White House is hoping to come away with a politically palatable deal on agriculture purchases and other concessions ahead of a critical midterm election season.
Trump has praised Xi ahead of the talks and predicted a royal welcome, which he said could be “the biggest display you’ve ever had in the history of China.”
One Chinese official, speaking on the condition of anonymity due to the sensitivity of the talks, said Beijing’s leadership is “cautiously optimistic,” but that its negotiators are working on a longer-term agenda aimed at putting a floor under the volatility of the past year. Beijing scored a modest win last month when the U.S. Supreme Court struck down a key weapon in Trump’s trade arsenal, ruling that his emergency tariffs were unlawful.
Analysts say the rollout of a major national strategy just before Xi sits down with Trump will likely bolster the confidence of Chinese negotiators. It echoes a similar dynamic last year, when Xi cemented the initial framework for the five-year plan days before meeting Trump in Busan, South Korea, amid a U.S. government shutdown.
“There’s this narrative floating around in some quarters of Washington that what the United States is doing in Venezuela and now in Iran is really somehow getting into China’s headspace. But what [China is] really focused on right now is the NPC and the five-year plan,” said Jonathan Czin, analyst at Brookings and former director for China at the National Security Council under President Joe Biden.
Also looming over the talks — and reflected in Li’s address to the NPC on Thursday — are lingering concerns in Beijing over Taiwan, particularly the U.S. approval of an $11 billion arms package in December and the specter of another multibillion-dollar deal that members of the U.S. Congress were notified about last month. Li said Beijing would “resolutely fight” supporters of Taiwan independence and “oppose interference,” while accelerating efforts to improve the treatment of Taiwanese people on the mainland in a bid to promote reunification.
The Chinese finance ministry’s annual budget report pledged to deliver “solid gains” in combat readiness and accelerate military modernization in 2026, raising the defense budget by 7 percent for 2026 — slightly below the 7.2 percent increases of the previous three years — bringing China’s annual military expenditure to more than $275 billion.
“Party priorities still run through the PLA [People’s Liberation Army]. Economic headwinds may force trade-offs elsewhere, but military modernization remains protected because Beijing increasingly sees hard power as the ultimate guarantor of its interests,” Singleton said.
The steady growth comes amid an ongoing purge of China’s top military ranks that has ensnared dozens of officials and culminated in January with the shock dismissal of China’s most senior uniformed officer, Zhang Youxia. The move handed Xi unchallenged control over the Central Military Commission, the country’s top military body, in what analysts describe as one of the most significant reshuffles of Chinese military power since the Tiananmen Square crackdown of 1989.
““We will stay committed to the Party’s absolute leadership over the people’s armed forces, and fully and thoroughly implement the system of ultimate responsibility resting with [Xi],” Li said.
Much of the purge has unfolded behind closed doors, but this week’s congress brought the upheaval into sharp relief as China’s top political bodies formally announced the dismissal of a dozen current and former senior military figures. Among them were three retired generals removed from the country’s top political advisory body, the Chinese People’s Political Consultative Conference (CPPCC). Their ouster followed the removal of nine senior military officers from the national legislature earlier in the week.
Among those removed from the CPPCC were retired general Han Weiguo, who commanded China’s ground forces from 2017 to 2021, and Gao Jin, the inaugural commander of the PLA’s Strategic Support Force, the first dedicated division to oversee China’s space, cyber and information warfare capabilities before being reorganized under new entities in a 2024 military shake-up.
Official statements announcing their dismissals offered no specifics, but similar moves in the past have often preceded investigations or corruption charges.
The draft outline of the five-year plan also set out how Beijing intends to modernize its military in the coming years, including sweeping reforms to military communications across agencies, better integrating civilian technological advances into defense systems and a stronger military presence along China’s borders.
The document also places heavy emphasis on boosting China’s self-reliance in critical technologies — particularly sectors where it is competing with the U.S., including artificial intelligence — calling on officials to “seize the historic opportunities presented by the new round of technological revolution” and “win the battle for key core technologies.”
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