Guiding development through strategic planning and innovation to sustain China's economic growth

Editor's note: Ma Xiaobai is director and research fellow at the Multinational Corporations Research Office, Enterprise Research Institute, Development Research Center of the State Council. Chen Gong is a lecturer with the Cadre Education and Training Center, State-owned Assets Supervision and Administration Commission of the State Council. The article reflects the authors' opinions and not necessarily the views of CGTN. It has been translated from Chinese and edited for brevity and clarity.

On March 5, Chinese Premier Li Qiang delivered the Government Work Report, saying that 2025 was a remarkable year. In the face of external shocks and domestic challenges rarely seen in recent years, China's economy defied the odds and demonstrated strong resilience, achieving 5% GDP growth and reaching a record 140.19 trillion yuan (about $20.4 trillion). 

China targets an economic growth of 4.5% to 5% in 2026, "while striving for better in practice." This economic growth target primarily considers the first year of the 15th Five-Year Plan (2026-30) period, leaving room for structural adjustments, risk prevention, and reforms to lay a solid foundation for future development. It is in line with the Long-Range Objectives Through the Year 2035 and matches the long-term growth potential of China's economy. 

At present, external factors have deepened, geopolitical risks continue to rise, and global economic momentum is weak, while multilateralism and free trade have suffered significant blows. Domestically, China is still grappling with both old problems and new challenges in economic development and transformation. This target is a balanced one, considering both domestic economic performance and external changes. By taking into account both "needs and possibilities", it is a pragmatic goal that emphasizes progress without losing stability. This reflects the Chinese government's approach to development based on objective laws, and its governance philosophy of being highly responsible for the country's economic and social affairs.

Setting this target aims to coordinate both the long-term and short-term, overall and specific aspects, continuity, and goal-oriented objectives, ensuring that China maintains its strategic focus amid complex environments.

How to interpret the 'GDP growth of 4.5%–5%'? The key focus is on 'quality' and 'stability'.

This target emphasizes quality over quantity, representing effective improvements in quality alongside reasonable growth in quantity, highlighting profound changes in development theories, methods, and momentum. In recent years, China has focused on innovative and higher-quality development, showcasing vibrant vitality. During the 14th Five-Year Plan period, the country's R&D spending rose at an average annual rate of over 10%, with high-value invention patents reaching 16 per 10,000 people.

By adhering to an innovation-driven development model, China has made significant achievements in technological innovation, with advancements in artificial intelligence, biomedicine, robotics, quantum technology and other fields leading global research and applications, and Chinese-made large language AI models driving the global open-source ecosystem.

 In 2025, the R&D intensity – measured as the share of spending in GDP – reached 2.8%, with the value of technology contracts growing by 10.8%. The industrial structure continued to optimize, with the added value of the high-tech manufacturing industry growing by 9.4%, that of the equipment manufacturing industry rising by 9.2%, industrial robot output increasing by 28%, integrated circuit production up by 10.9%, and the core industries of the digital economy accounting for more than 10.5% of GDP. The annual production of new energy vehicles exceeded 16 million units. 

In the 15th Five-Year Plan period, China will focus on promoting high-quality development, with an emphasis on the leading role of technological innovation. The average annual growth rate of R&D expenditure across society will exceed 7%. China will continue to focus on developing the real economy, developing new quality productive forces suited to local conditions, and building a modern industrial system to accelerate the cultivation and expansion of new growth drivers.

Another reason lies in the fact that China serves as a stabilizer of global economic growth. According to the IMF's 2025 World Economic Outlook report, global economic growth is projected to decrease from 3.3% in 2024 to 3.2% in 2025 and 3.1% in 2026, particularly with the GDP growth of developed economies expected to be about 1.5% in 2025-2026. Over the past five years, China's GDP has successively crossed the milestones of 110 trillion yuan, 120 trillion yuan, 130 trillion yuan, and 140 trillion yuan, with an average annual growth rate of 5.4%, significantly surpassing the global average and the average growth rate of developed economies. As the world's second-largest economy, China's stable growth helps promote stronger and more sustainable global growth. Research by the IMF shows that when China's growth rate rises by 1 percentage point, growth in other countries increases by around 0.3 percentage points, and that China has contributed more than 30% to global economic growth for many consecutive years, serving as a stabilizing anchor for the global economy and supply chains.