China's focus on tech-led growth in 2026

China’s Government Work Report presented during the 2026 “Two Sessions” offers an important window into how the country intends to advance toward its long-term development goals, including the broader vision for 2035. The report outlines strategies aimed at sustaining economic momentum, strengthening technological capabilities, and maintaining resilience amid growing global uncertainty. It also emphasizes continued investment in research and development, the promotion of high-tech industries, and a commitment to people-centered development as China pursues its goal of building a modern socialist society.

The report comes at the start of the 15th Five-Year Plan period (2026–2030), a phase widely expected to shape China’s economic and technological trajectory for the next decade. In this context, technological progress remains central to national development policy.

Premier Li Qiang announced at the opening of the annual legislative session that China aims to achieve economic growth between 4.5 percent and 5 percent in 2026. While this target is more moderate than the high-growth rates of earlier decades, economists view it as a pragmatic response to an increasingly complex global environment. Geopolitical tensions, supply chain disruptions, and slowing international demand have reshaped economic conditions, placing greater emphasis on stability and resilience rather than rapid expansion alone.

Setting the growth target within a range rather than a fixed number also provides policymakers with flexibility to respond to evolving economic conditions. Analysts note that this approach allows authorities to prioritize the quality and sustainability of growth while strengthening domestic demand and maintaining employment stability.

The Government Work Report outlines several additional economic targets. These include maintaining the urban unemployment rate at around 5.5 percent, creating more than 12 million new urban jobs, and keeping consumer price inflation near 2 percent. The government also aims to ensure that personal income growth keeps pace with overall economic expansion, maintain a stable balance of payments, and secure grain production of approximately 700 million tonnes.

Environmental sustainability remains another key focus. China plans to reduce carbon dioxide emissions per unit of GDP by around 3.8 percent, reflecting continued efforts to balance industrial development with climate commitments.

Fiscal policy will play an important role in achieving these objectives. The government plans to maintain a deficit-to-GDP ratio of about 4 percent, with the fiscal deficit projected to reach 5.89 trillion yuan. This expansionary stance is intended to support infrastructure development, stimulate domestic consumption, and fund technological research and industrial upgrading.

Beyond economic stability, the Government Work Report places strong emphasis on science and technology innovation as the driving force behind China’s long-term modernization strategy.

China has pledged to accelerate efforts toward greater independence in critical technologies. In the past, rapid development often relied on integrating foreign technologies through open markets and international partnerships. While international cooperation will remain important, the current strategy places stronger emphasis on indigenous innovation and expanding domestic research capacity.

Enterprises are expected to play a central role in this transformation. Policymakers have stressed that companies should become the primary engines of technological advancement, bridging the gap between academic research and industrial application. This reflects the growing recognition that innovation increasingly emerges from dynamic interaction between private firms, research institutions, and government support.

One notable element in the report is the concept of a “smart economy.” To support this vision, China plans to expand the AI Plus Initiative, which seeks to integrate artificial intelligence across multiple sectors. Authorities also aim to build ultra-large intelligent computing clusters and advanced digital infrastructure capable of supporting next-generation AI systems.

Private technology firms have responded positively to these policy signals, with many indicating plans to increase investment in areas such as artificial intelligence security, high-performance semiconductor chips, and advanced computing technologies. Strengthening these capabilities is widely viewed as essential for maintaining technological competitiveness in an era of intensifying global rivalry.

The Government Work Report also highlights the importance of developing emerging and future-oriented industries that could define the next phase of economic growth. Priority sectors include integrated circuits, aerospace and aviation, biotechnology, and satellite internet services. The rapidly expanding low-altitude economy, which includes drone logistics and aerial mobility systems, has also been identified as a potential new growth engine.

China has already made notable progress in several of these fields. National spending on research and development reached 3.92 trillion yuan in 2025, equivalent to 2.8 percent of GDP, marking a record level. This surge in funding has supported breakthroughs in areas such as humanoid robotics, advanced artificial intelligence, and biotechnology.

Looking ahead, the government plans to accelerate major national science and technology programs targeting frontier research fields. These initiatives will focus on achieving breakthroughs in advanced semiconductors, quantum technologies, biomanufacturing, brain-computer interfaces, and nuclear fusion, technologies widely considered critical to future industrial transformation.

Another distinctive feature of China’s innovation model is the complementary role played by state-owned enterprises and private companies. Large state firms and government-funded institutions often provide the resources needed for fundamental research and large-scale infrastructure projects. Meanwhile, private enterprises, operating closer to market demand, play a crucial role in translating scientific discoveries into commercial products and services.

Government investment in new infrastructure, including digital networks and high-performance computing facilities, is expected to further strengthen this ecosystem. Such infrastructure supports emerging industries while creating opportunities for private sector participation in innovation-driven development.

Taken together, the priorities outlined in the Government Work Report reflect a broader shift in China’s development philosophy. Rather than focusing solely on rapid economic expansion, the country is increasingly emphasizing balanced growth, technological self-reliance, and industrial modernization.

In an era marked by geopolitical uncertainty and evolving global economic dynamics, this approach may provide China with a more sustainable path forward. By combining stable economic management with ambitious technological goals, China aims to strengthen its position in the global innovation landscape.

As the 15th Five-Year Plan unfolds, its success will likely depend on how effectively policy ambitions translate into tangible technological breakthroughs and economic opportunities. If current momentum continues, the coming years could mark an important phase in China’s transition toward a more innovation-driven and resilient economy.