China has set an economic growth target range of 4.5% to 5% for 2026, marking a return to an interval-based goal after similar approaches in 2016 and 2019. This year also signifies the first time China's GDP growth target has been set below 5%. This development raises questions about whether it indicates a slowdown in China's potential economic growth rate and an entry into an era of "4%-range" expansion. How should this target range be interpreted?

First, the annual GDP growth target is not a prediction of the economy's actual performance but reflects the government's guidance on the desired intensity and outcome for economic growth in the coming year. Setting a target of 4.5% to 5% does not imply that this is the maximum achievable growth. Considering the economic performance in 2025, achieving a higher growth rate in 2026, while challenging, remains within reach, supported by confidence and solid foundations. From this perspective, the interval target for this year can be seen as a proactive adjustment. As stated in the government work report, these anticipated goals are set primarily to "create space for structural adjustment, risk prevention, and reform promotion in the initial year, laying a solid foundation for better development in the future."

The economic growth target guides macroeconomic policies and the actions of major provincial economies, serving as the core focus of national economic work. By proactively adjusting the growth target in the initial year, macroeconomic policies and key economic regions can retain flexibility and build a stronger foundation. In 2026, China's economic development faces numerous challenges, including "deepening impacts from changes in the external environment, persistently rising geopolitical risks... and various longstanding and emerging challenges in domestic economic development and transformation." Setting a growth target as a range also provides policy space to address unexpected situations.

However, adjusting the growth target does not signify a relaxation of the emphasis on economic expansion. Since 2024, China's macroeconomic target framework has evolved, with increased importance placed on employment and price stability objectives. Against the backdrop of ongoing price pressures, more policies in 2026 may focus on stabilizing prices to boost nominal GDP growth—an indicator directly linked to the financial well-being of businesses and individuals.

Secondly, a gradual slowdown in GDP growth is an inevitable phase in the development of all economies, representing a transition from quantitative expansion to qualitative improvement. This does not indicate economic stagnation. By international standards, this growth rate remains robust. Between 2007 and 2011, China's GDP growth target was around 8%, declining to the "7%-range" in 2012, the "6%-range" in 2016, and entering the "5%-range" in 2022. Although the growth rate has progressively decreased, for an economy with a total output exceeding 140 trillion yuan and over four decades of rapid growth, a 4% to 5% expansion is still considered high.

In recent years, China's contribution to global economic growth has remained at approximately 30%. Research estimates suggest that, coupled with the long-term stability of the renminbi exchange rate, maintaining a GDP growth rate of 4.5% would sustain China's contribution to global growth at around 30%. This growth rate also largely supports the achievement of domestic long-term objectives. According to various research estimates, an economic growth rate between 4.17% and 4.4% is required to meet the goals set for 2035. The government work report also notes that "the economic growth target aligns with the long-term vision for 2035 and is generally consistent with China's long-term growth potential."

It is also important to recognize that an adjustment in the economic growth rate does not equate to a halt in development. A higher-quality "4%" growth rate may be preferable to a "5%" achieved through stimulative policies and large-scale investment, which is why recent economic policies have repeatedly emphasized the relationship between quality and quantity. At a time when the marginal returns of large-scale "investment in physical assets" are diminishing, increased investment in innovation is needed to enhance total factor productivity. Simultaneously, shifting resource allocation towards "investing in people" by increasing spending on social welfare can improve the general public's sense of gain from economic development.

Finally, economic growth remains a fundamental indicator, forming the basis for achieving full employment and ensuring social welfare. Given the current realities of China's economic development, pursuing a certain level of quantitative growth is necessary. This is the underlying intent of the "4.5% to 5%" target range—"preparing for the worst while striving for the best." Economic development levels vary across regions, and different provinces and industries face distinct circumstances. Providing a target range does not lower the requirement for economic growth but allows for localized and practical approaches to drive economic development in 2026. As the government work report states, "all regions should proceed from their actual conditions and strive for positive outcomes through solid work." Prior to the National People's Congress sessions, several major provincial economies had already set interval growth targets for 2026, emphasizing the pursuit of better results in practical implementation. An interval target does not imply that annual growth will gravitate towards the lower bound. Considering the needs and capabilities of China's economic and social development in 2026, efforts are more likely to aim for optimal outcomes and "strive for better results."