China’s 2026 Two Sessions: Key Takeaways

March 30, 2026 |
IDSA Comments

The annual meetings of China’s top advisory body, the National Committee of the Chinese People’s Political Consultative Conference (CPPCC) and the top legislature, National People’s Congress (NPC), collectively known as ‘Two Sessions’, were held from 4-11 March. The event witnessed a gathering of party leaders, thousands of CPC delegates, bureaucrats, businessmen, experts and analysts to deliberate on government policy reports. The highlight is usually the Government Work Report (GWR) presented by the Chinese Prime Minister on behalf of the State Council to the NPC.

At the 2026 ‘Two Sessions’, the unveiling of the 15^th 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 15^th 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 tasks’. To that end, government spending will prioritise “boosting consumption, investing in people and raising living standards”. Additionally, the draft outline for the 15^th Five-Year Plan, mentioned in the GWR, highlights that for the next five years, “improving living standards”, “increasing consumer spending” and investment in “income growth” and “domestic consumption” will be major tasks to make household consumption part of the GDP.[iv]

Traditionally, government investment has primarily been directed towards expanding manufacturing capacity. A strong manufacturing base has been considered imperative for maintaining China’s international competitiveness and driving economic growth.[v] However, in recent years, issues relating to trade tariffs and protectionism that have impeded exports, combined with China’s overcapacity, have turned leadership’s attention towards strengthening domestic demand.

Currently, China’s domestic consumption is below the global average.[vi] Thus, strengthening consumption became the top priority in 2025 and 2026, up from its previous number three position in the 2024 GWR. As per the deliberations during the Two Sessions, the government will utilise fiscal stimulus, incentives, and subsidies to increase consumption. Further, to encourage individual spending, the government has pledged to increase residents’ purchasing power, provide safety nets, improve product quality, and create new consumption points.

Parallel to increasing efforts to strengthen domestic consumption, the Party also renewed its emphasis on the digitisation of the economy and self-reliance in ‘strategic science and technology’. This constitutes the second aspect of China’s development strategy. For 2026, the inaugural year of the 15th Five-Year Plan, the government has, for the first time, proposed creating an ‘intelligent economy’ to foster greater human-machine collaboration and expand the integration of artificial intelligence and emerging technologies across all industries.[vii]

In recent years, integrated circuits (involving semiconductors, microchips, and the chip-manufacturing industry), aerospace, biomedicine, and the low-altitude economy have been identified as emerging pillars of economic growth[viii]. Beijing hopes that an intelligent economy with AI at its core will create linkages among these four industries and promote more synergised development across all four sectors, opening up prospects for cross-integration. According to Chinese strategists, an intelligent economy will transform the nature of the Chinese economy from scale and speed to quality and efficiency.

As a prerequisite for establishing an intelligent economy, Beijing has also pledged to deepen self-reliance in future technologies. Both the work report and the draft of the 15^th Five-Year Plan specify that the government will develop world-class science and innovation engines. Indicating strong state backing to nurture innovation, the draft mentioned that Beijing will not only increase funding but also share risks. Further, the government will strive to build an ecosystem that will enable “original and disruptive innovation”.[ix]

For decades, China’s economic growth has fueled the modernisation of the People’s Liberation Army (PLA). However, along with strengthening the army, Beijing has ensured that the party’s absolute control over the military remains intact. Complete domination of the PLA is seen as crucial to ensure the Chinese Communist Party’s (CPC) legitimacy and regime security. Accordingly, the proceedings on military affairs at the 2026 Two Sessions demonstrated Beijing’s resolve to tighten its grip on the PLA.

Xi Jinping, in a meeting with the PLA delegation on 7 March, reiterated that “there must be no one in the military who harbours disloyalty to the Party”. Vice Chairman of the Central Military Commission Zhang Shengmin and Chinese Defence Minister Dong Jun, who attended the meeting, also made similar statements.[x] Indicating the increasing importance of ideological purity and absolute obedience to the Party core, transcending factionalism, Zhang called for “deepening political rectification” of the PLA.[xi]

Defence Minister Dong asserted that, as China prepared to enter the 15th Five-Year Plan period, the PLA should undertake closer political and ideological alignment with the Party as one of the foremost tasks for strengthening the army.[xii] It is noteworthy that the same meeting also discussed controls and civilian supervision over military funds. Xi instructed the establishment of “strict supervision and hard rules” and the revision of how military budgets are spent to monitor the flow of funds, their usage, and the exercise of power.[xiii] While framed as anti-graft initiatives, Xi appeared to tighten the purse strings to enforce party loyalty more strongly and undercut any attempts to expand personal influence.

Conclusion

Three issues, namely strengthening domestic demand, self-reliance and dominance of strategic technologies, and reassertion of political and ideological control over the PLA, emerged prominently in this year’s Two Sessions. Assessed through the lens of China’s major power strategy, the policy priorities underscored at the current Two Sessions signal first immediate consolidation in the near-term, as China is trying to maintain an economic momentum in the face of structural changes and systemic shocks and second shape a military that will be able to carry out Xi’s geostrategic vision.

In the long term, however, the legislative sessions reflected a policy of a long, protracted struggle against the US and the West. As trade and technological competition vis-à-vis the West intensifies, China not only intends to fortify its domestic base against external pressures and coercive measures but also to advance its military edge to project power globally and consolidate its geopolitical position, thereby deterring Western military adventurism.

Views expressed are of the author and do not necessarily reflect the views of the Manohar Parrikar IDSA or of the Government of India.

[i] “China Sets 4.5-5% GDP Growth Target for 2026 while Striving to Achieve Better Results in Practice”, Global Times, 6 March 2026. “China Softens its Growth Target to 4.5%-5% — Lowest Since 1991”, Firstpost, 5 March 2026.

[ii] “Xinhua Decoding Government Work Report of the Two Sessions丨4.5%-5%, What Do You Think of the Expected Economic Growth Target in 2026?”, Xinhuanet, 5 March 2026.

[iii] Qian Zhou, “China’s Economy in 2025: GDP Reaches 5.0% Growth Despite Challenges”, China Briefing, 19 January 2026.

[iv] “Report on the Work of the Government, Delivered at the Fourth Session of the 14th National People’s Congress of the People’s Republic of China on March 5, 2026”, NPC Observer, 16 March 2026.

[v] Alicia García-Herrero, “China’s ‘Two Sessions’ Points to Determination to Rebuff Trump”, Bruegel, 11 March 2025.

[vi] Lu Zhe and Zhan Shuo, “Macro In-Depth Report: Based on a Comparison of 38 countries: Why China’s Consumption Rate is Low”, Sina Finance, 8 March 2025. Li Kang, “Economist Liu Yuanchun: The Low Consumption Rate of Chinese Residents is Essentially a Distribution Problem”, Lianhe Zaobao, 7 November 2025.

[vii] “Xinhua News Agency Reporter takes you to Listen to the Two Session: Listen to the Vitality of “New”, Xinhuanet, 6 March 2026. Gao Kang, Song Rui, Liu Meizi, “The two sessions Xinhua Decoding Government Work Report丨”Creating a new form of intelligent economy”, the new formulation has deep meaning”, Xinhuanet, 8 March 2026.

[viii] “21 Comment: Intelligent Economy, Supporting China’s Science and Technology to Carry GDP”, 21Jingji.com, 10 March 2026.

[ix] Wang Xiaoxia, “China Sets Greater Sci-tech Strength Goal”, Science and Technology Daily, 11 March 2026.

[x] Liao Shifeng, “Led by the Party Xi Jinping: There must be no People in the Army who have Ulterior Motives Against the Party”, United Daily News, 8 March 2026.

[xi] Phoebe Zhang, “China’s Last CMC General Urges more ‘Political Rectification’ in PLA Centenary Countdown”, SCMP, 6 March 2026.