China Faces Economic Challenges Amid Global Slowdown

China is planning a 2026 economic growth target of 4.5% to 5% amid global slowdown, despite achieving a 5% growth in 2025. Economists highlight the need for a balanced growth model to prevent recession-like conditions, as domestic demand weakens, affecting fixed-asset investments.

China is expected to set its official economic growth target for 2026 at between 4.5% and 5%, according to a report by the South China Morning Post. This reflects the challenges facing the world's second-largest economy as it contends with slowing global growth, even with a substantial trade surplus of $1.2 trillion.

In 2025, China's $19 trillion economy grew by 5.0%, meeting government targets and offsetting weak domestic consumption by boosting exports—an approach that experts warn may not be sustainable. The International Monetary Fund predicts global growth will remain at 3.3% this year, as in 2025, before declining by one percentage point in 2027, suggesting Chinese exporters may have to lower prices to maintain shipment levels.

Policy makers face pressure to reorient the manufacturing sector towards a sustainable post-pandemic recovery, promoting resilience and balanced growth over rapid expansion to avoid economic stagnation similar to Japan's. However, some economists estimate that China's economy grew only 2.5% to 3% last year due to reduced fixed-asset investments from weaker domestic demand, which left a half-trillion-dollar gap.