China's biggest annual political event, the Two Sessions (National People's Congress of China and Chinese People's Political Consultative Conference), has come to a close. This year, China set its economic growth target at the lowest level in 35 years and put forward domestic demand recovery and an artificial intelligence (AI)-centered industrial transition as the core strategy for the next five years. With U.S. technological competition intensifying and external uncertainties such as trade frictions and the Middle East war looming, the plan is to improve the economic structure and build a stable growth base through technological self-reliance rather than pursuing rapid growth.
At 3 p.m. on the 12th (local time), the closing session of the National People's Congress of China was held at the Great Hall of the People in Beijing. At the session, attended by Chinese leaders including President Xi Jinping and Premier Li Qiang, 11 agenda items, including the draft of the 15th five-year plan (2026–2030) and the draft government work report, were passed with overwhelming approval.
The core of the next five-year plan draft finalized that day is "stimulating domestic demand" and "technological self-reliance." Authorities cited sluggish domestic demand as a major structural problem in the Chinese economy and said they would strengthen measures such as income expansion and job creation to address it. They also signaled an intention to institutionalize consumer subsidies as a more long-term policy.
To that end, China will expand its fiscal deficit to as much as 4% of gross domestic product (GDP). Even during the COVID-19 pandemic in 2020, China kept its fiscal deficit in the 3% range of GDP, but, following last year, it again broke with that practice this year and maintained a record-high 4%. In addition, it will issue ultra-long-term special government bonds worth hundreds of trillions of won and special local government bonds to fund various projects. To secure consumer spending power, it will improve wage and social security systems and implement income-boosting policies.
China also plans to accelerate scientific and technological self-reliance amid checks from the United States and other Western countries. It will strengthen basic research and the supply of key parts and technologies, and increase national-level science and technology projects. The strategic industries to be intensively fostered include ▲ semiconductors (integrated circuits) ▲ aviation and space ▲ bio and pharmaceuticals ▲ low-altitude economy (such as drones) ▲ quantum technology ▲ sixth-generation mobile communications (6G) ▲ brain-computer interface (BCI) ▲ future energy.
Authorities in particular emphasized an "AI transition." The idea is to restructure the industrial landscape around AI technology to achieve productivity innovation. Calling this a "smart economy," authorities presented an "AI plus (+)" initiative to apply AI to all fields, including industry, the economy, and administration. This is the first time the term smart economy has appeared at the National People's Congress of China. The 15th five-year plan passed that day mentioned AI-related terms more than 50 times.
The government work report setting this year's economic growth target at 4.5%–5% was also approved at the closing session. China had kept its economic growth target at around 5.0% for the past three years but slightly lowered it this year. It is the lowest in 35 years since 1991. With domestic factors such as sluggish domestic demand, a real estate crisis, deflation, and youth unemployment compounded by external risks including U.S. tariff pressure and the Iran war, the move is seen as a bid to shore up fundamentals by pulling back the economic growth defensive line by one step.
In addition, the closing session approved the Law on Promoting Ethnic Unity and Progress, the Ecological Environment Law, the National Development Planning Law, and the work reports of the Standing Committee of the National People's Congress of China, the Supreme People's Court, and the Supreme People's Procuratorate. Among them, the Law on Promoting Ethnic Unity and Progress strengthens the status of the standard language (Mandarin, 普通话) even in autonomous regions of ethnic minorities. The goal is to assimilate minority cultures into Han culture.
Zhao Leji, chairman of the Standing Committee of the National People's Congress of China, said, "The period of the 15th five-year plan is an important time when we must firmly lay the foundation of socialist modernization and make an all-out effort, and the successful implementation of the 15th five-year plan carries great significance," adding, "We must work to ensure a successful start to the 15th five-year plan and turn the vision into reality."
Meanwhile, there was no speech by Chinese President Xi Jinping that day. Except in years when the Communist Party congress is held, Xi has omitted the National People's Congress of China closing speech. The prime minister's press conference that had been held in the past was also abolished starting in 2024, so Premier Li Qiang likewise did not deliver a separate message.