China’s 2026 Two Sessions: 6 Key Takeaways

This piece was prepared by APCO’s Greater China team.

The annual meetings of the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC), known as the “Two Sessions,” which began last week, are now approaching their conclusion. This year’s Two Sessions are particularly notable, as the government has released not only the Government Work Report (GWR), outlining China’s economic and social priorities for 2026, but also the 15th Five‑Year Plan (FYP), which sets out China’s strategic vision through 2030.

1. China sets a realistic, rather than ambitious, GDP target for 2026.
   China’s 2026 GDP growth target of 4.5%-5% reflects a more cautious and realistic assessment of domestic and external conditions. The use of a range underscores policymakers’ recognition of rising global uncertainties and the still insufficient momentum of new growth drivers. This target aligns more closely with international forecasts, marking a shift from last year’s more ambitious approach. Consistent with the 14th FYP, China does not intend to set fixed annual targets for the next five years but aims to keep growth within a “reasonable range” to support its long-term goal of achieving at least USD 20,000 per capita GDP by 2035.
2. The “anti-involution” campaign is set to continue.
   China’s more modest growth target creates space for structural adjustments aimed at tackling “involution”—a pattern of excessive investment leading to overcapacity, price wars and weakened corporate profitability. The GWR places stronger emphasis on disciplining local government investment promotion, curbing ineffective spending and encouraging a more balanced approach to assessing performance. Regulators will tighten management of production capacity in heavy industries while strengthening enforcement of pricing rules to curb below cost competition. At the same time, policymakers must balance these measures against employment and innovation goals, allowing emerging sectors to retain “appropriate surplus capacity” to support job creation and technological competitiveness.
3. The government will focus its support on the bright spots in consumption.
   Boosting domestic demand remains the top priority for 2026. The most notable shift is the stronger focus on offline consumption, especially in third- and lower-tier cities where consumer confidence is relatively resilient. The government will support the development of malls, pedestrian streets and other commercial infrastructure, encouraging companies to expand their physical presence in such areas. The trade in program will continue subsidizing green and smart goods while channeling more funds to offline purchases. At the same time, services consumption, including tourism, sports, culture and health care, will be promoted through expanded school breaks and staggered paid leave.
4. Industry and innovation will remain the top priorities for the rest of the decade.
   While expanding domestic demand tops the list of tasks for 2026 in the GWR, China’s industrial and technological agenda receives the highest priority in the FYP. Within this agenda, the development of a modern industrial system is designated as the top task. Artificial intelligence (AI) will play a central role through the “AI Plus” initiative, which seeks to embed AI across the economy and explore pathways toward artificial general intelligence (AGI). Policymakers will continue cultivating emerging pillar industries, such as integrated circuits, aviation and aerospace, biomedicine and the low altitude economy, while advancing future industries such as embodied AI, quantum technologies, 6G and brain computer interfaces.
5. Policymakers pledge efficient “investment in people” for sustainable economic development.
   The inclusion of “investing in people” in the 15th FYP elevates human capital development to strategic importance. Policymakers aim to strengthen talent cultivation to support industrial upgrading and technological self-reliance while simultaneously addressing people’s livelihood concerns to bolster consumer confidence. Investments will focus on education, healthcare, public services and income growth, with greater attention to efficiency and targeted outcomes. Compared with 2025, the 2026 GWR places heavier emphasis on ensuring that social and talent development spending is pragmatic, better benchmarked and more outcomes driven, reflecting the need to balance social objectives with a more constrained growth environment.
6. China will work to secure a more stable external environment.
   The government described the external environment China faced last year as “grave and complex,” underscoring the importance of securing a more stable international landscape. The 15th FYP prioritizes stabilizing relations with major powers, with Foreign Minister Wang Yi expressing cautious optimism toward U.S.-China ties and describing 2026 as a potential “landmark year.” At the same time, Beijing reiterated concerns over rising European protectionism. Trade diversification will continue through the expansion and upgrading of free trade agreements. These efforts aim to reinforce resilience, safeguard China’s global economic position and strengthen its role as both market and manufacturing hub.

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