Nation aims to tackle deep structural issues head-on

CAI MENG/CHINA DAILY

During the recently concluded two sessions, the country released its Government Work Report. Within the report, the Chinese government signaled a willingness to tackle deep structural issues head-on, chart a new growth model and boost foundations for long-term development.

The report comes as China's economy is entering a pivotal stage in its transition toward high-quality development, against the backdrop of a slowing global economic landscape.

Standing at the intersection, the report maintains the familiar policy tone of "seeking progress while maintaining stability" and places greater emphasis on improving efficiency through structural reform and institutional upgrades.

Compared with government work reports from 2023 to 2025, the 2026 report reflects a more flexible and forward-looking approach to macroeconomic management.

This year's report sets the GDP growth target at between 4.5 percent and 5 percent, expressed as a range rather than a single figure. The format helps stabilize expectations while giving policymakers greater room to adjust policies if conditions change.

The range reflects confidence in China's growth potential while enhancing policy flexibility amid a complicated global environment. It allows the authorities more space to balance structural adjustments, risk prevention and reform.

At the same time, the report stresses that officials will strive for better results in actual work, reinforcing the policy orientation of steady progress while signaling a stronger push toward growth.

Such target-setting both anchors market expectations and supports continued improvements in the quality of growth, while keeping the overall economy stable.

The 2026 report also places greater emphasis on price stability. Restoring reasonable price growth is now explicitly included as a key objective of macroeconomic management.

This aligns with monetary policy guidance that emphasizes promoting stable growth while encouraging a gradual rebound in prices.

The policy direction reflects current economic conditions, helping revive demand, stabilize market expectations and guide the economy back toward a healthier level.

Together, these adjustments — from growth ranges to stronger coordination between growth and price levels — show how China's macroeconomic policy framework continues to evolve.

The relationship between growth, price stability and structural upgrading is becoming more coordinated, reflecting a governance approach that emphasizes stability, flexibility and long-term quality in the era of high-quality development.

Within the broader policy framework of expanding domestic demand, the 2026 report highlights a stronger combination of consumption and investment policies.

On the consumption side, 250 billion yuan ($36.25 billion) in trade-in subsidies continues existing support measures. Meanwhile, 100 billion yuan in new fiscal-financial funds aimed at boosting domestic demand creates additional funding channels.

Expanded interest subsidies on personal consumption loans also strengthen households' access to credit.

Together, these measures create a multilayered policy system that links fiscal and financial tools and connects supply with demand, helping unlock further household spending potential.

On the investment side, 800 billion yuan in new policy-oriented financial instruments will help leverage government funding to attract private capital for major projects.

These fiscal tools strengthen project financing while improving the efficiency of capital allocation. They also provide stable, long-term funding for infrastructure and key sectors.

The report also calls for increasing the share of government investment devoted to people's livelihoods.

Public investment is gradually expanding into sectors such as education, healthcare and eldercare, reflecting a development philosophy that increasingly emphasizes "investing in people".

As consumption policies gain momentum and investment structures improve, domestic demand is becoming a more stable pillar of economic growth.

Rising consumption potential and higher-quality investment reinforce each other, strengthening domestic demand as a key driver of China's economic expansion.

The 2025 report proposed continuing the "AI Plus initiative". The 2026 report goes further, dedicating a full section to "building a new form of smart economy".

Artificial intelligence is being elevated within the national development strategy, evolving from a technology initiative into a major force reshaping economic structures.

The report proposed developing ultra-large intelligent computing clusters and strengthening coordination between computing power and electricity — both considered essential components of next-generation infrastructure.

It also highlights the development of next-generation intelligent devices and autonomous agents, while calling for new AI-native business models and industries.

These signals suggest that AI is moving beyond isolated applications toward a deeper restructuring of industrial ecosystems.

Stronger links between digital infrastructure, computing capacity and industrial applications are laying the groundwork for a broader intelligent economy.

At the same time, industries such as integrated circuits, aerospace, biomedicine and the low-altitude economy are being positioned as new pillars of growth.

Future industries — including advanced energy, quantum technology, embodied intelligence, brain–computer interfaces and 6G — will receive additional support through increased investment and risk-sharing mechanisms.

This reflects a steadily improving innovation system that combines financial resources with stronger institutional backing.

From accelerating technological adoption to building a comprehensive intelligent economy, China's innovation policy framework continues to deepen.

As institutions, industrial ecosystems and technological capabilities evolve together, a new wave of scientific innovation is expected to provide stronger momentum for structural upgrading and high-quality development.

Institutional reform features prominently in the 2026 report. To advance the creation of a national unified market, policymakers plan to draft regulations governing its development.

The report also proposes issuing a list of permitted and prohibited actions for local governments in investment promotion, while strengthening the enforcement of fair-competition reviews.

The writer is chief economist at ICBC International Holdings Ltd.

The views do not necessarily reflect those of China Daily.