China to boost spending to meet growth target amid rising global uncertainty

BEIJING - China will boost spending in major infrastructure and public services to help meet this year's economic growth target, government officials said on Friday, as the US-Israeli war on Iran adds to global uncertainty.

Beijing on Thursday unveiled a slightly lower growth target of 4.5%-5% for 2026, down from last year's 5%, which was met largely through a one-fifth surge in its trade surplus to a record $1.2 trillion.

"To achieve the target, we have a solid foundation, which is reflected in at least three aspects: overall scale, innovation capacity, and risk?response capability," Zheng Shanjie, the head of the National Development and Reform Commission, the state planner, told a press conference on the sidelines of the annual parliament meeting.

"At the same time, we are clearly aware that many difficulties and problems remain in the process of economic and social development."

The government on Thursday also set out a five-year plan aimed at accelerating scientific breakthroughs and embedding artificial intelligence across the economy, as the rivalry with the US intensified.

Under the plan, China will roll out 109 major projects, spanning water and power networks, computing?power infrastructure, urban pipelines, consumption?related facilities, and education and healthcare, with investment expected to exceed 7 trillion yuan this year, Zheng said.

"Implementing these major projects — which tightly combine investment in physical infrastructure with investment in people — will strengthen China’s overall national capacity, stabilize its social security system, and improve people’s livelihoods," Zheng said.

China's trade started the year stronger than expected, extending last year's momentum, but a worsening geopolitical backdrop is creating more uncertainty for exporters and supply chains, commerce minister Wang Wentao said at the same press conference.

"Our next priority is to promote more balanced trade development," he said. "Exports and imports are like the two wheels of a car - if they're in balance, the car runs more smoothly and can go further."

Wang pledged to import more agricultural products, quality consumer goods, advanced equipment, and key components.

In the work report, the government acknowledged an “acute” imbalance between strong supply and weak demand, alongside risks stemming from a deepening property slump and high local?government debt. Analysts say any economic rebalancing will likely be slow, as reforms to welfare provision and the social safety net continue to lag.

At the conference, finance minister Lan Foan said a special 100 billion yuan fiscal-financial coordination fund will play a key role in boosting consumption and private investment this year.

When combined with a 250 billion yuan special treasury bond quota for funding the consumer goods trade-in scheme, the policy push will be stronger than last year’s, Lan said, without elaborating. Last year, China allocated 300 billion yuan for the consumer trade-ins.

Pan Gongsheng, governor of the People's Bank of China (PBOC), said the central bank will flexibly and efficiently use monetary policy tools, such as cuts to the reserve requirement ratio and interest rates, this year to support growth, while noting a sharp rise in risk aversion and foreign exchange market volatility, triggered by the US-Israeli war with Iran. — Reuters