On 5 march 2026, premier li qiang of the state council presented the report on the work of the government at the fourth meeting of the fourteenth session of the national people's congress. The report is not only a platform for governance in the year of the 15th plan, but also a declaration that the chinese economy is seeking new paths to high-quality development in a complex internal and external environment. As a starting point for the “fifty-five” period, the policy orientation in 2026 was both under pressure of steady growth in the short term and with the historic mission of structural transformation and dynamic energy transformation in the medium and long term。
IEconomic development: from a strategy of “ensuring growth” to a strategy of “quality enhancement”
The most dramatic change in the 2026 report of the government is the setting of economic growth goals. According to the report, the expected gross domestic product growth target for 2026 is “4. 5-5 per cent”, which is the first time that the expected region has been adjusted to a flexible space for medium- and high-speed growth, following successive targets of “around 5 per cent” or “over 5 per cent” over the past few years。
This adjustment does not mean giving up growth, but reflects a pragmatic approach of “realism” at the decision-making level. In his report, prime minister li explained that this was mainly to “give room for structural change, risk prevention and reform”. In combination with the new steps of our gross domestic product (GDP), which reached 140. 19 trillion yuan last year, the expansion of the base has naturally slowed growth. This approach to inter-district management gives greater flexibility to local and sectoral efforts to achieve better results in practice, without overspreading the long-term potential for short-term growth。
In terms of macroeconomic policy configuration, the report shows a commitment to “positive action”. The deficit rate is proposed to be around 4 per cent, with a deficit of 5. 89 trillion yuan, and the size of general public budget spending will reach the 30 trillion yuan mark for the first time. The 4 per cent deficit rate has been relatively rare in recent years, especially in the context of the issuance of over-long special national debt of 1. 3 trillion yuan, support for “two-fold” construction (the implementation of major national strategies and capacity-building for security in priority areas) and the transfer of 250 billion yuan to support consumer goods in exchange for new ones, fiscal policy is shifting from “conservative” to “active”。
Of particular note is the fact that fiscal policy in 2026 was characterized by “stable, well-structured and cost-effective”. Compared to 2025, the deficit rate was flat, but the size of the deficit increased by $230 billion; earmarked debt remained at $4. 4 trillion for two years in a row, with no significant expansion and a shift towards efficiency gains; and the use of the extra-long special national debt focused more on $800 billion for “two” construction and $250 billion for direct domestic demand. This structural optimization indicates that fiscal policy is shifting from mere infrastructure development to investment in human capital and consumption。
With regard to monetary policy, the report continues the expression “moderate easing”, which clearly sends a signal of sufficient liquidity. More importantly, the report incorporated a “reasonable recovery in prices” into the important consideration of monetary policy, which meant that central banks would be more active in pushing inflation back to consensual levels by, for example, reducing interest rates and breaking the negative cycle of “low prices-low profits-low incomes-low consumption.”。
IiInnovative drivers: new qualitative productivity drops from “concept” to “entity” land
If 2025 is the universal year of the theory of “new quality productivity”, then 2026 is the critical year for its full landing. In deploying this year's government mission, the report highlights the need to “strengthen the development of new dynamics” and makes clear that the focus of economic development should be on the real economy。
The draft “fifty-five” planning framework proposes three indicators in terms of innovation drivers, the most notable of which is the “social average annual increase of over 7 per cent in r&d investment”. This objective is consistent with the “xivv” plan and ensures continuity in the level of r&d inputs. In 2025, the investment in research and development for our society as a whole reached 2. 8 per cent and the turnover of technology contracts increased by 10. 8 per cent, laying a solid foundation for the innovation drive of the “fifty-five” period。
The report provides a detailed picture of where new qualitative productivity is located. In the emerging pillar industries, integrated circuits, aerospace, biomedicine, low-altitude economy were named. It is worth noting that, following the first inclusion of the “low-altitude economy” in the report last year, it has become more advanced this year, alongside aerospace, showing the strategic value of the space economy as a stereo-based economy. With regard to more forward-looking future industries, the report mentions future energy, quantum technology, smartness, brain interfaces, 6g and so on, especially the introduction of smart and brain interfaces, which bodes well for the integration of human robotics and biotechnology as a new high ground for technological competition。
In order to nurture these high-input, long-cycle future industries, the report places particular emphasis on institutional innovation, encouraging zong state enterprises to take the lead in opening up their applications and establishing future industrial input growth and risk-sharing mechanisms. This means that the state not only provides funding, but also provides a testing ground, allowing for a certain margin of error. At the same time, the statement in the report that “government investment funds should take the lead in making patient capital” is a direct response to the current difficulties in raising funds at the first level of the market and directs capital away from short-term gains and long run alongside hard technology firms. In the current multi-level capital markets, the lower sti enterprise threshold and the lower profitability requirements have led many frontier firms to take advantage of the capital market finance function, extending primary market investments to secondary markets, in line with the report on the report on the comprehensive reform of capital market investment financing, increasing the share of direct market financing and equity financing。
In the digital economy, the report states that “the value added of core industries in the digital economy as a share of GDP reached 12. 5 per cent”, a marked increase from more than 10. 5 per cent in 2025. Deepening the expansion of the ai+ initiative, promoting the accelerated diffusion of new generation smart terminals and intelligent bodies, promoting the commercialization of artificial intelligence applications in priority sectors, and nurturing new models of new business practices in the intelligent sector. These initiatives indicate that the digital economy is moving from a new phase of expansion of scale to a deeper enabling real economy。
IiiHuman security: from “investment” to “investment in people”
While well-being is a permanent theme of the government's report on its work, the 2026 report on its work shows a profound shift from “investment in” to “investment in people”. The draft “fifty-fifth five” plan sets out seven targets for employment, income, education, health care, health care and “one year and one year” in terms of the well-being of the population, covering the most immediate and realistic interests of the population。
In the area of employment, the report set a target of more than 12 million new jobs in towns and cities and investigated unemployment rates of about 5. 5 per cent. Against the backdrop of the expected slight slowdown in GDP growth, employment targets remain high, meaning that policies will be more oriented towards labour-intensive industries and services. The report proposes “building an employment-friendly approach to development” and implements a steady job expansion initiative to support enterprises in labour-intensive industries to stabilize jobs and create new jobs around the development of new and future industries. Of particular concern is the fact that the report explicitly calls for “improvement of measures for employment entrepreneurship adapted to the development of artificially intelligent technologies” and for a forward-looking response to possible shocks in the context of the potential employment crowding-out effects of technological change。
In the area of income distribution, the report proposes “the establishment and implementation of income-generating schemes for urban and rural residents”, with particular emphasis on practical initiatives to promote income-generating and property-based income for low-income groups. This means that capital market governance, reform of the rural land system, etc., may be hidden wings that will increase the income of the population, while at the same time arranging for over $250 billion of special national debt to support consumer goods in exchange for old and new goods, indirectly promoting income growth for the population by stimulating consumption, creating a virtuous circle of “receiving-consumption”。
In the field of education and health care, the report proposes concrete and modest improvements. In the area of education, the policy of free pre-school education has been improved, the supply of general high school degrees has been increased, and enrolment in quality undergraduate education has been continuously expanded. In the area of health care, the per capita rate of financial assistance for health care has been raised by 24 yuan, and the multi-level health-care system has been improved. With regard to the “old and old” issue, the minimum monthly basic pension rate for urban and rural residents has been raised by an additional $20; the individual pension system has been introduced throughout the country; the consumer subsidy for old-age services has been piloted; and, in the area of childcare, housing security for families at the beginning of the marriage has been strengthened; support for families with many children to improve their sexual housing needs has been provided, reflecting the national strategy outlined in the report in response to the ageing of the population。
Iv. Looking for robust and innovative futures in transition
The 2026 report on the work of the government, while pursuing development, also attaches great importance to its workRisk preventionAnd structure optimization. In the area of real estate, the report proposes an entirely new approach, “as a result of the city's measures to control increments, de-stocks, good supplies”. This marks a complete shift in the real estate development model from “high turnover, high leverage” to “stock operation”. At the same time, the orderly promotion of safe, comfortable, green and intelligent “good houses” will be the main route to future reforms on the supply side of real estate, as basic housing needs are met and improved sexual demand is mainstreamed。
In the area of local debt risk resolution, the report supports adequate policies to address hidden debt, using “emphasizing new hidden debts” as a discipline. Specialized bonds were used not only for project construction, but also for the replacement of hidden debts, the digestion of government arrears on corporate accounts, and direct local financial distress. This approach of “opening the front door and closing the back door” helps to strike a balance between steady growth and risk prevention。
In the context of a competitive market environment, the report explicitly states that “the integrated management of `inner-volume' competition” is a matter of concern. In response to the virulent competition of local governments in the solicitation of inputs, a “list of incentives and prohibitions” was proposed to regulate “inner-roll” competition by combining capacity regulation and standard leadership. At the same time, the regulation on the construction of a national unified large market regulates tax incentives and financial subsidies to break local protection. These initiatives help to improve supply and demand patterns and profitability in some sectors and create a level playing field market environment for quality development。
This year's report does not provide a strong stimulus to “deep water pouring” in response to short-term challenges, but rather through precise “drip water pouring” — whether the investment in the future of patient capital or the activation of the consumption potential of the spring and autumn vacation system — highlights the increased focus on internal restoration and re-engineering of the economic cycle。
As prime minister li has said, achieving these goals requires better “financial management” at all levels of government, “using every penny saved to the critical point of development and the immediate needs of the population”. Against the backdrop of the complex external environment and the difficult task of internal transformation, social dynamism through more active public policies, the breaking down of the barriers to development through capital market reforms, and the building-in of domestic demand through income-generation programmes are aimed at creating a good start for the “fifty-five” in a complex and volatile environment。
