China's economic ambitions hit limits to growth as its national congress
meets
[March 03, 2026] CHAN
HO-HIM and KEN MORITSUGU
BEIJING (AP) — China’s progress in building a modern economy, evident in
its kung-fu fighting robots and self-parking cars, is hitting limits as
a downturn in its housing industry drags on, small businesses suffer and
young people struggle to find jobs.
The gap between Chinese leader Xi Jinping's high-tech, artificial
intelligence-driven ambitions and the hard realities of slowing growth
is the backdrop for the annual meeting of the country’s largely
ceremonial national legislature, the National People’s Congress, which
begins Thursday.
During the meetings, which draw about 3,000 deputies to Beijing, top
leaders will outline China's annual target for growth and the congress
will endorse a five-year blueprint of policy priorities until 2030.
“What we’ll see is the trade-off between whether it’s going to be
industry and tech, or looking after domestic demand,” said Alexander
Davey, an analyst at the Mercator Institute for China Studies. “These
are the two priorities that are juggling for Xi Jinping right now.”
China’s economy is losing momentum
In a city in southern China's Guangdong, families were cutting back on
big purchases during last month's Lunar New Year holidays. Even for
auspicious houseplants like orchids, used as a symbol of abundance and
prosperity, prices were slashed by as much as 40% from last year.
The penny pinching has small business owners complaining about hard
times.
China reported it reached “around 5%” economic growth in 2025, but
economists question some official data.
The relatively robust pace of growth was supported by strong
manufacturing as exports surged, despite U.S. President Donald Trump's
tariff hikes and other disruptions to trade.
“Hitting the 2025 growth target is hardly reassuring as the Chinese
economy is losing growth momentum, with rising imbalances and enormous
structural problems being papered over by a surge in export-driven
growth,” Eswar Prasad, a professor of economics and trade policy at
Cornell University, told The Associated Press in emailed comments.
Property slump persists
A downturn in China's housing market began several years ago and
piecemeal efforts to revive the industry have made only fitful progress.
Dozens of property developers defaulted on their debts as authorities
cracked down on excessive borrowing. With overall home prices down 20%
or more from 2021, a recovery remains elusive.
The meltdown in one of the country's biggest industries eliminated
hundreds of thousands of jobs and with 12.7 million graduates entering
the job market this year, more than 16% of young Chinese are unemployed.
Some just are giving up and opting out of the rat race, or “lying flat.”
Families whose main assets are their homes have grown cautious about
spending, weakening consumer demand and confounding longstanding efforts
to shift the economy to greater reliance on domestic investment.
The congress may bring some fresh moves to beef up social welfare and
other support, measures economists say are overdue and necessary for
sustained, steady growth.
China sticks to exports
Reliance on exports is what help keeps China's economy buzzing, at least
for now. China recorded a $1.2 trillion trade surplus in 2025, as
exports kept its factories humming. Despite the China-U.S. trade war, it
has been shipping more to regions including Europe and Latin America.
But it's facing pushback from its trading partners.
Under leader Xi, China has prioritized developing advanced technologies
such as AI, robotics, computer chips, electric vehicles and renewable
energy. Massive state support has companies churning out more EVs, TVs,
solar panels and other products than China and its trading partners
need.
“To achieve those goals, the government is going to have to continue to
provide subsidies and preferential support for high-tech and strategic
industries,” said Leah Fahy, a China economist at Capital Economics.
“(That) will, in turn, continue to fuel overcapacity.”
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A food vendor passes a construction site in Beijing, China, Sunday,
Feb. 8, 2026. (AP Photo/Ng Han Guan)
 In a recent report, the
International Monetary Fund urged China to cut massive state
subsidies and other support for industries that many Western
countries say give its companies an unfair advantage over foreign
rivals. At the same time, social welfare and other areas of the
economy lag behind.
The focus on what the ruling Communist Party has dubbed “high
quality development” is bound to continue under the five-year plan
for 2026-2030 that lawmakers are due to endorse at the congress.
Over the past few decades, China's transformation into a
manufacturing superpower was underpinned by booming construction of
homes, office buildings, roads, ports and railways. But tech supply
chains are narrower, providing fewer jobs. So the trickle down
effect is much weaker, said Lynn Song, chief economist for Greater
China at ING Bank.
“If anything, the more successful the so-called future industries
become, the more they will draw resources away from the traditional
sectors that still provide the bulk of employment and livelihoods
for most people,” said Henry Gao, a professor of law at Singapore
Management University.
Xi is expected to consolidate more power
The annual congress is an impressive show. Thousands of delegates
fill the Great Hall of the People in central Beijing. A military
band performs and delegates from various ethnic groups attend in
traditional clothing.
For all the pomp, the meeting is largely a set piece. The congress
lasts only one week and its near-unanimous votes on the final day
formalize decisions made ahead of time by party leaders. It's a show
of unity reaffirming the polices and direction they have set.
Increasingly that leadership has centered on one person, Xi, who has
consolidated power since taking the helm in 2012. Now 72, he is one
of modern China's most powerful leaders. Some analysts think Xi will
emulate Mao Zedong, the revolutionary leader who founded communist
China, and rule for life.
Annual reports presented at the congress are replete with references
to the party's crucial role, “with Comrade Xi Jinping at its core.”
Xi’s military purge is under the spotlight
After ascending to power, Xi doubled down on longstanding
anti-corruption campaigns, forcing many officials to step down to
face investigation and prosecution, including top military brass.
Days before the congress opened, the national legislature removed
nine military officers from its ranks, widening a years long
military purge. Last month, Gen. Zhang Youxia, the highest ranking
military member just below Xi, was ousted over suspected
disciplinary violations.
Xi’s actions may weaken China's military readiness in coming years,
but he is also ensuring the force would be more politically reliable
in the longer run, a report by Center for Strategic and
International Studies think tank suggested.
The anti-corruption drives have eradicated potential political
rivals, and his iron grasp on power makes it much less likely other
officials will challenge his vision to build China into a
self-sufficient tech leader and 21st-century global power.
____
Chan reported from Hong Kong. AP Business Writer Elaine Kurtenbach
contributed from Bangkok.
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