China is scheduled to begin a major policy meeting. What is the important announcement?

BEIJING—China’s policymakers are scheduled to announce this year’s growth targets and stimulus measures at an annual parliamentary meeting starting Wednesday.

The gathering, known as the “Second Session,” will consist of a consultative meeting that begins later in the day and the National People’s Congress, which is scheduled to open on Thursday. Chinese Premier Li Qiang is scheduled to announce a series of economic goals at the National People’s Congress, most of which were finalized at the December meeting.

At this year’s parliament, policymakers are also expected to announce details of a new five-year development plan, the 15th in modern Chinese history. Investors will be looking for clues about how the Chinese government plans to achieve its domestic technology ambitions.

This goal is the penultimate step towards China’s 2035 goal, which focuses on achieving technological self-sufficiency.

Senior Chinese leaders, including top diplomat Wang Yi and the heads of the economy and finance ministries, typically address the press during both sessions. The gathering usually lasts about a week and is scheduled to end on March 11th this year.

Asia Society analysts said China’s anti-corruption campaign had reduced the number of delegates attending both sessions this year.

Here’s what economists expect Lee to announce on Thursday.

Several local governments in China have already lowered their growth targets for 2026, suggesting the Chinese government may hit its national targets as well.

According to the Asia Society, a growth target below 5% would be the lowest on record and down from “about 5%” over the past three years. China did not set a GDP target for 2020 due to the pandemic.

“A slightly lower target would give policymakers more room to prioritize structural reforms and improve data quality,” economists at the Economist Intelligence Unit said in a note last week, predicting growth of 4.6%.

However, Morgan Stanley analysts said they viewed it as “unlikely” that the Chinese government would set smaller growth targets, adding that in times of great economic stress, policymakers typically set GDP ranges rather than single-digit targets. The company also pointed out that 2026 is the first year of China’s “15th Five-Year Plan,” and faster growth is needed to establish trust.

Such a goal is in line with last year’s goal, which saw an unusual increase in government spending relative to gross domestic product (GDP).

The 4% deficit set for 2025 is the highest on record dating back to 2010, according to data accessed via Wind Information. The previous high was 3.6% in 2020.

China’s policy announcements will be closely scrutinized for the details of its consumer stimulus measures, including expanded trade-in subsidies and additional support for the struggling real estate market. The two sessions will shed light on Beijing’s thinking on the impact of US trade tensions and the developing conflicts in the Middle East.

The world’s second-largest economy faces deep-rooted challenges at home.

“There is a growing disconnect between the Chinese government’s goals (and data measuring economic performance) and the actual ability of Chinese policymakers to use the tools at their disposal to support domestic demand,” Logan Wright, a partner at the US-based research firm Rhodium Group, said in a report on Tuesday.

Wright added that China’s financial system lends heavily to unproductive local governments and state-owned enterprises to prevent them from collapsing, and that most of the fiscal spending is carried out by the same institutions.

“The net result is that the return on investment and economic activity for the same amount of lending and government spending is reduced, while private sector investment remains weak,” he said.