The head of the Chinese government, opening the annual session of the National People's Congress (National People's Congress) at the Great Hall of the People, admitted that the country was facing obstacles. — We are aware of the difficulties and challenges. The changing external environment and geopolitics are having a deeper impact on China, and domestic development still faces old problems and new challenges, Li said, presenting the government's work report.
Beijing declares that the upcoming period of the 15th Five-Year Plan will be a transition to an economy based on “new qualitative production forces”, which in practice means billions of investments in artificial intelligence, quantum technologies and a breakthrough in the production of its own semiconductors. This is to be a response to “unprecedented external shocks” and growing protectionism on global markets. The Prime Minister announced the issuance of special ultra-long government bonds worth 1.3 trillion yuan (approx. USD 188.5 billion) to support these key projects.
Read: China no longer needs the West. They have their own integrated circuits
This is how China wants to save public finances
The report included detailed plans to save public finances. The budget deficit is planned at around 4%. GDP, which translates into a record amount of 5.89 trillion yuan ($853 billion). This is an increase of 230 billion yuan ($33 billion) compared to the previous year. The central government also intends to issue 4.4 trillion yuan ($637 billion) of special-purpose bonds to local governments to help them restructure hidden debt and implement infrastructure projects. In turn, the consumer price index (CPI) is expected to be around 2%, which signals a desire to escape deflationary pressure.
Read: China has a problem in the economy. “Downward pressure”
Despite the difficulties, the authorities set ambitious social goals. The government plans to create over 12 million new jobs in cities to solve the problem of growing unemployment, especially among young people.
“We must prepare for the worst while striving for the best,” Li said, pointing to the need for the administration to “tighten its belt.”
The army is Xi Jinping's priority
Nevertheless, military modernization remains a priority for Chinese leader Xi Jinping. Although the growth rate of defense spending dropped from 7.2 percent in 2025 to 7 percent currently, it still clearly exceeds planned economic growth. Political loyalty becomes a priority on par with technical modernization. Premier Li directly referred to the need to maintain discipline after the anti-corruption purges and emphasized the full implementation of the accountability system of the chairman of the Central Military Commission (CMC), which cements Xi Jinping's authority over the law enforcement apparatus.
Read: A Chinese official used ChatGPT at work. He accidentally revealed the secret strategy
The document highlights the past year's successes, including the production of over 16 million electric vehicles (NEVs) and the entry into service of the Fujian aircraft carrier.
At the same time, Beijing announces the fight against the demographic crisis, promising to build a “fertility-friendly society” and develop the so-called silver economy.
The “Two Sessions” (Lianghui) is the most important political event in the Chinese calendar. The economic growth target is the lowest in 35 years (excluding the pandemic year 2020, when no target was set). Analysts indicate that Beijing is currently prioritizing national security and technological self-sufficiency over dynamic GDP growth.
