China’s 2026 Government Work Report: Key Takeaways
Chinese Premier Li Qiang on March 5 delivered a government work report to nearly 3,000 deputies to the 14th National People’s Congress at the Great Hall of the People in Beijing, on the opening day of the country’s top legislature’s annual session.
The all-encompassing report carries unusual weight this year as it marks the start of China’s 15th Five-Year Plan—the penultimate policy cycle before Beijing seeks to basically achieve modernization by 2035.
The report briefly touches on the development goals for the 15th Five-Year Plan, but does not elaborate, as the specifics will be laid out in the forthcoming plan outline. Instead, we focus on several new wordings and notable details in the government work report per se across economy, technology, and environmental policy—offering clues to China’s priorities for 2026.
Here are the key takeaways.
1. GROWTH TARGET FOR 2026
The main targets for development this year are as follows:
· GDP growth of 4.5–5 percent, while striving for better in practice
· surveyed urban unemployment rate of around 5.5 percent
· over 12 million new urban jobs
· CPI increase of around 2 percent
· personal income growth in step with economic growth
· a basic equilibrium in the balance of payments
· grain output of around 700 million metric tons
· a reduction of around 3.8 percent in carbon dioxide emissions per unit of GDP
In proposing these targets, we have considered the need to leave some room for structural adjustments, risk prevention, and reform in the opening year of this five-year plan period, so as to lay a solid foundation for delivering better performance in the coming years. The GDP growth target is well aligned with our long-range objectives through the year 2035 and broadly in line with the long-term growth potential of China’s economy. As favorable conditions for achieving this target are in place, all local governments should, in light of local realities, make solid efforts to deliver good outcomes.
First of all, for the first time in decades—excluding the pandemic-hit year of 2020—China has set its GDP growth target below 5 percent in the worst-case scenario. For China’s economic sectors and local governments, however, a lower growth target may in fact provide greater policy space. It gives them more room to defuse local government debt risks, accelerate the shift to new growth drivers, and advance the green transition—all central to China’s push for “high-quality development.”
Second, external pressures continue to play a role. Beginning in April last year, additional tariffs imposed by the United States weighed on China’s economic performance. Premier Li Qiang noted in the report:
From the second quarter on, in response to new developments facing the economy, particularly the impact of U.S. tariff hikes, we fully leveraged policies already in place and introduced a range of more robust measures to maintain employment and economic stability.
With the ongoing tensions in the Middle East pushing up energy prices and adding to global geopolitical uncertainty, China’s growth prospects are also likely to face renewed pressure.
Third, the report once again emphasizes the need for “personal incomes rose in step with economic growth,” reflecting China’s continued commitment to make domestic demand the main engine of economic growth.
For a long time, the growth of household income lagged behind overall economic growth. Under the 12th Five-Year Plan, the country set out to align urban and rural residents’ income growth with economic growth. By the end of the plan in 2015, this goal had been achieved: between 2010 and 2015, national per capita disposable income rose at an average annual rate of 8.9 % in real terms, outpacing GDP growth over the same period.
Fourth, the phrase “striving for better in practice,” which immediately follows the GDP target, is particularly noteworthy, as it signals that China could still aim for a 5 percent growth target if external conditions prove favorable.
Sustained growth remains crucial for the long-range objectives through 2035 that Xi Jinping attaches great importance to. In his own words, the aim is to “substantially grow the per capita GDP to be on par with that of a mid-level developed country.” By international benchmarks, that would require per capita GDP to exceed 20,000 U.S. dollars—roughly double China’s 2020 level.
Back-calculating from the 2035 objectives, and considering a projected annual population decline of approximately 0.20 percent by 2035, China would require an average annual GDP growth of 4.17 percent over the periods of the 15th and 16th Five-Year Plans. Therefore, sustaining growth remains a critical indicator for the country over the coming decade.
2. DOMESTIC DEMAND
Building a robust domestic market. Taking the expansion of domestic demand as our priority, we should make coordinated efforts to boost consumption and expand investment, tap into every potential for growth in domestic demand, and better leverage the strengths of our enormous market.
We will continue to advance special initiatives to boost consumption. We will adopt measures to stimulate the internal drive for household spending as well as polices to boost consumption, so as to propel further consumption growth. We will formulate and implement an income growth plan for urban and rural residents and roll out a range of practical measures to boost the earnings of low-income groups, increase property income, and refine the remuneration and social security systems.
In laying out its major tasks for 2026, the government work report places “building a robust domestic market” in the very first paragraph. This emphasis echoes the communique of the fourth plenum convened last October, which reaffirmed that expanding domestic demand remains a strategic priority. It also aligns with last year’s government work report, which positioned domestic demand as the main engine and stabilizing anchor of economic growth. It also signals China’s determination to move away from the state-led investment model that fueled China’s rapid growth in the early 21st century.
To this end, the 2026 report outlines a broad suite of demand-side policies. For the first time, it proposes “formulating and implementing an income growth plan for urban and rural residents,” marking a transition from abstract ideas toward specific policy behaviors designed to expand residents’ purchasing power. By coupling measures to increase household income with direct policies to stimulate consumption, Beijing is moving beyond investment and export, two of the three major economic drivers, in order to cultivate more resilient domestic demand.
To promote the expansion and upgrading of goods consumption, 250 billion yuan in ultra-long special treasury bonds will be earmarked for consumer goods trade-in programs, and refinements will be made to the implementation mechanisms for relevant policies. A special fiscal-financial coordination fund of 100 billion yuan will be created to facilitate domestic demand expansion through combined measures such as loan interest subsidies, financing guarantee, and risk compensation. We will broaden the coverage of loan interest subsidies for personal consumers and service entities, while also raising ceilings and extending terms.
The consumer goods trade-in programs last year helped propel retail sales of targeted categories to 2.61 trillion yuan ($373 billion); this year the government is allocating 250 billion yuan in ultra-long special treasury bonds to further support this initiative and expand its reach.
Crucially, financial policy is being marshaled more directly in the service of domestic demand. For the first time, the report said that a special fiscal-financial coordination fund of 100 billion yuan will be created to encourage consumption.
These measures align with broader trends in China’s consumption landscape, where policymakers have noted an increasing contribution from services and upgraded consumption, as residents allocate a larger share of their income to leisure, travel, and quality‑of‑life goods and services.
3. NEW GROWTH DRIVERS
We will nurture emerging industries and industries of the future.
We will launch industrial innovation projects, encourage central government enterprises and other SOEs to take the lead in making application scenarios more accessible, and foster emerging pillar industries such as integrated circuits, aviation and aerospace, biomedicine, and the low-altitude economy. To nurture industries of the future such as future energy, quantum technology, embodied AI, brain-computer interfaces, and 6G technology, mechanisms will be put in place to increase funding and share risks in these fields.
We will roll out mechanisms to help grow SMEs that use specialized and sophisticated technologies to produce novel and unique products, and also nurture unicorn companies. We will make full use of the National Venture Capital Guide Fund and redouble efforts to develop angel investment and venture capital investment. Government investment funds should play an exemplary role as patient capital and help more startups grow into leading technology enterprises more quickly.
The government has outlined a broad division of responsibilities between state-owned and private enterprises across emerging and future industries. SOEs are expected to take the lead in capital-intensive, cross-sector projects, while private companies are incentivized to engage in technology-driven, market-oriented industries through risk-sharing arrangements and preferential investment policies. Government investment funds are expected to function as patient capital, backing long-term investment in future industries.
We will create new forms of smart economy.
We will advance and expand the AI Plus Initiative. We will promote faster application of new-generation intelligent terminals and AI agents and encourage large-scale commercial application of AI in key sectors and fields, so as to foster new forms and models of AI-native business. We will support the development of open-source AI communities and build a vibrant open-source ecosystem.
We will launch new infrastructure projects on hyper-scale intelligent computing clusters and coordinated development of computing capacity and electricity supply. We will step up integrated monitoring and distribution of computing capacity across the country and support the development of public cloud services. The development of satellite internet will be expedited, and an upgraded 5G Plus Industrial Internet Initiative will be introduced. We will extensively develop and utilize data resources, refine the foundational systems for data as a production factor, and build high-quality datasets. Steps will be taken to improve AI governance.
Against the backdrop of a global AI arms race, this year’s government work report introduces the concept of a “smart economy” for the first time, aiming to establish a full-scale ecosystem for the AI industry, encompassing commercial applications, infrastructure building, R&D support, and regulatory oversight. The remarkable advances in AI and robotics showcased over the past two years on the Spring Festival Gala stages reflect the dynamics of this evolving environment, and the outlook for China’s AI sector is set to shift dramatically over the coming year.
4. SCI-TECH SELF-RELIANCE
We will promote integrated development of education, science and technology, and talent. We will institute sound, integrated mechanisms on this front to boost coordination across development plans, policies, resources, and evaluations. We will improve mechanisms for ensuring that talent training programs are geared to economic and social development needs, advance reforms of higher education institutions on a categorized basis, and adjust academic disciplines and majors as needed. We will launch a new round of initiatives to develop world-class universities and academic disciplines, build national centers for interdisciplinary studies, and do more to cultivate top-tier homegrown innovators.
In the third plenum resolution, China's latest reform roadmap published in 2024, the segments of education, science and technology, and talent were presented in the same paragraph, allegedly for the first time in such a Party or policy document. The government work report clearly followed the same pattern, underscoring the importance of integrating the three aspects to advance sci-tech development.
Last year, when meeting with members of the China Democratic League and the China Association for Promoting Democracy from the education sector who attended the CPPCC National Committee session, Xi also emphasized the importance of advancing these three areas in a coordinated manner.
From the perspective of policy design, the core idea is to establish a more effective coordination mechanism, strengthening alignment in planning, policy coordination, resource allocation, and evaluation systems. The goal is to build a more integrated framework that links talent cultivation, scientific research, and industrial development. Through this approach, China is attempting to construct a more comprehensive national innovation system to support technological progress, industrial upgrading, and long-term economic development.
We will pursue full integration between technological and industrial innovation. We will develop Beijing (the Beijing-Tianjin-Hebei region), Shanghai (the Yangtze River Delta), and the Guangdong-Hong Kong-Macao Greater Bay Area into international centers for scientific and technological innovation and turn them into world-class innovation engines. The principal role of enterprises in innovation will be reinforced. We will back leading high-tech enterprises in spearheading the creation of innovation consortia and undertaking more major national science and technology projects.
The concept of building world-class innovation engines appears in the government work report for the first time. Such innovation hubs typically bring together leading universities, research institutions, and high-tech enterprises. Through high-level research and collaboration, they generate original scientific breakthroughs and act as key sources of technological innovation.
These hubs also benefit from strong clustering effects. When top talent, capital, research institutions, and companies are concentrated in a specific region, they can form a vibrant innovation ecosystem that significantly improves the efficiency of technological development.
For example, Beijing has strong advantages in basic research, with institutions such as Tsinghua University, Peking University, and numerous national research institutes. Shanghai benefits from a comprehensive industrial base and strong financial resources that support the commercialization of scientific achievements. The Guangdong-Hong Kong-Macao Greater Bay Area, meanwhile, combines international connectivity with a robust manufacturing base, creating favorable conditions for innovation and industrial application.
Amid the new round of technological revolution, China seeks to cultivate its own Silicon Valleys—plural.
5. GREEN TRANSITION
Guided by our goals of achieving peak carbon emissions and carbon neutrality, we will make coordinated efforts to cut carbon emissions, reduce pollution, pursue green development, and boost economic growth, while strengthening our green development drivers.
Although they are mentioned side by side in the report, carbon reduction and pollution control now carry different degrees of urgency in China’s current environmental governance. Carbon reduction and the broader green transformation of the economy have been elevated to a higher priority. In fact, Xi Jinping made a similar point during the formulation of the 14th Five-Year Plan: “During the 14th Five-Year Plan period, China’s ecological civilization development has entered a crucial stage in which carbon reduction becomes the key strategic priority.” During the 13th Five-Year Plan period, China’s environmental policy focused primarily on pollution control, while the 14th Five-Year Plan has shifted the strategic emphasis toward carbon reduction. The upcoming 15th Five-Year Plan will therefore continue to advance this major systemic undertaking.
We will boost the green and low-carbon economy. We will improve the policies for promoting green and low-carbon development, launch initiatives for upgrading quality, lowering costs, and reducing carbon emissions in key industries, and drive forward the development of zero-carbon industrial parks and factories. We will set up a national fund for low-carbon transition and foster new growth drivers such as hydrogen power and green fuels. We will exercise tight and effective regulation over energy-intensive and high-emission projects, accelerate efforts to phase out outdated production capacity, and support innovation and application of green and low-carbon technologies and equipment. The systems for total resource consumption control and comprehensive resource conservation will be improved, and recycling of recyclable materials will be stepped up.
We will actively yet prudently work toward peaking carbon emissions and achieving carbon neutrality. We will implement the system of controlling both the total amount and intensity of carbon emissions and refine the systems for carbon emissions statistics and accounting as well as carbon footprint management. The coverage of the China Carbon Emission Trade Exchange will be expanded. An outline of the plan for strengthening China’s energy sector will be formulated. We will build a new electric power system, accelerate the construction of smart grids, develop new types of energy storage, and promote more extensive use of green electricity. We will also promote clean and efficient use of fossil fuels.
The series of measures outlined in the report this year constitutes essential steps for China to achieve its carbon peaking target by 2030.
The proposal to establish a National Low-Carbon Transition Fund, introduced for the first time, reflects the government’s intention to support industrial transformation through financial instruments. Mobilizing long-term capital to support low-carbon technologies and green infrastructure represents a stronger form of policy intervention and could help address the financing challenges associated with large-scale energy transitions.
Meanwhile, the development of hydrogen energy and green fuels as new growth sectors indicates that China is seeking new economic growth opportunities through technological innovation and industrial upgrading within the green transition. China has already achieved notable success in the development of lithium batteries and electric vehicles, building a relatively complete industrial chain and gaining strong global competitiveness. By contrast, Japan moved earlier to explore hydrogen fuel cell vehicles as part of its clean energy strategy and has carried out extensive technological experimentation. However, due to the high cost of hydrogen transportation and the significant investment required for refueling infrastructure, hydrogen vehicles have not yet achieved widespread adoption.
Nevertheless, investing in hydrogen technologies remains hopeful. It could not only foster new industrial growth opportunities but also provide additional technological options for the future energy system.
Strict control over high-energy-consuming and high-emission projects will help accelerate the elimination of outdated production capacity and optimize industrial structure. At the same time, accelerating the construction of smart grids and developing new energy storage technologies will improve the utilization efficiency of renewable energy and address the integration challenges of wind and solar power, thereby facilitating the transition of China’s energy structure from traditional fossil fuels toward cleaner energy sources.
Overall, China is promoting the development of a green and low-carbon economy through institutional reforms, industrial upgrading, and energy system transformation. These efforts aim not only to advance the goals of carbon peaking and carbon neutrality, but also to support broader economic restructuring and high-quality development.
Tan Yixiao is a Xinhua journalist. Currently based in Beijing, she spent three years in the U.S. covering politics and international affairs. Email: yixiaotan@live.cn
Zhai Xiang works as a research fellow with the Xinhua Institute on China-U.S. relations.
Xu Zeyu, founder of Sinical China, is a journalist with Xinhua News Agency. Email: xuzeyuphilip@gmail.com
For our documentary on the 15th Five-Year Plan: