At the 2026 ‘Two Sessions’, the unveiling of the 15th Five-Year Plan was a major point of focus. The Party met in the backdrop of a turbulent environment, both internally and externally. On the home front, the purge of top officials Zhang Youxia and Liu Zhenli brought to the fore issues of power struggle and factionalism within the party. China’s external environment remained challenging. Amid security threats and strained diplomatic ties in the neighbourhood, relations with the West, although stabilised, remain fragile. On the other hand, Trump’s tariffs and US military actions in Venezuela and Iran have created uncertainties that hinder China’s strategic and economic interests. The focus has naturally been on gauging how China plans to navigate these complexities.

The GWR and deliberations at the ‘Two Sessions’ 2026  signalled first, China’s dual development strategy, that is, boosting domestic consumption while integrating artificial intelligence in traditional industries and cultivating future technologies. The aim is to insulate China’s economic growth from systemic external shocks. Second, as China strives to achieve socialist modernisation by 2035 amid the churnings of the international system, the political loyalty of the People’s Liberation Army (PLA) to the Party is likely to be more strongly enforced during the 15th Five-Year Plan period.

One of the key takeaways from this year’s Two Sessions was the economic growth rate being set at 4.5-5 per cent. Reportedly, this is the lowest growth rate targeted since 1991.[i] This modest growth rate reflects the leadership’s outlook on China’s economic situation. Officially, Beijing has explained that the growth target has been set in view of “domestic economic operation and changes in the external environment”.[ii]

However, the subdued expectation may be due to the slow momentum observed in 2025 quarterly growth, even though China achieved the 5 per cent target.[iii] Further, weaker economic growth is anticipated owing to persistent pressures from an ageing population, declining revenues from land sales and real estate, reduced foreign direct investment, and trade and tariff pressures. Besides the new quality productive forces which are expected to be the engines of growth, China is also eyeing to make domestic consumption another pillar to accelerate its economic momentum.

As in last year’s work report, the government maintained its emphasis on the importance of increasing domestic consumption. What is notable, though, is that this year the government has perceivably doubled down on this aspect. The GWR clearly states that, in the face of a complex and challenging international environment, strengthening domestic demand and, consequently, household consumption will be one of the ‘strategic........

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