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1 [1] (May 8, 2026)

handle is hein.crs/govetyh0001 and id is 1 raw text is: China's Economy: Current Trends and Issues The government of the People's Republic of China (PRC or China) is targeting China's per capita gross domestic product (GDP) to reach that of a middle-income developed country by 2035. Several factors-slowing growth, an aging population, local government debt, a reliance on fixed-asset investment, overcapacity in manufacturing, and global trade frictions-may constrain China's ability to reach its economic goals. While the PRC government reports that China's real GDP grew 5% in 2025, some economists say actual growth was 2% to 3% (text box). China's growth is unbalanced after decades of policies to boost supply that did not concurrently incentivize domestic demand. According to the International Monetary Fund (IMF), PRC debt-financed investment and weak domestic demand have led to PRC domestic and external imbalances. The World Bank argues that soft domestic demand, weak domestic and foreign business confidence, tepid productivity growth, and systemic debt, among other issues, constrain PRC growth prospects. Some economists say that the economic returns of China's growth model-which emphasizes government investment and exports-are diminishing, and recommend fiscal stimulus to boost domestic consumption. PRC economic policies still emphasize government investment and exports, however. At the same time that it faces such structural impediments, the PRC government is seeking to boost economic growth and productivity by investing in science and technology (S&T), education, digital infrastructure, and advanced manufacturing. PRC leaders are pursuing these objectives through state-led industrial policies which can distort markets and incentivize production well above what China can absorb domestically. As products supported by PRC industrial policies come to market, China is relying on exports for growth. China's share of global manufacturing output was about 29% as of 2023, highlighting the potential effects of PRC production and exports on global markets. The IMF assesses that the high volume of PRC exports is creating adverse spillover effects and destabilizing the global economy. PRC industrial policies are fueling China's export expansion in electric vehicles (EVs), solar energy, semiconductors, steel, and other sectors. Economic Priorities China's 15th Five-Year Plan for National Economic and Social Development (FYP) (2026-2030) reinforces indigenous innovation as the core driver of China's development. It calls for reducing China's reliance on foreign S&T and building China's global leadership in strategic and emerging sectors. Key priorities include Boosting PRC capabilities in areas in which China depends on the United States, Europe, and Japan (e.g., aircraft; agriculture; advanced equipment; energy; gas turbines; and semiconductors); Updated May 8, 2026 * Upgrading legacy industries (e.g., steel, petrochemicals, and shipbuilding), and boosting advanced manufacturing with breakthroughs in materials and equipment, and the industrial use of artificial intelligence (AI) and robotics; * Developing PRC-controlled global supply chains, and promoting e-commerce and services exports; * Boosting China's research and development capabilities; * Digitalizing China's economy (with the digital economy to reach 12.5% of China's GDP by 2030); and * Deepening China's capital markets and internationalizing China's currency, the renminbi. PRC leaders also are continuing to expand the role of state capital and state-owned firms in the economy and the role of the party in PRC firms. They have elevated the role of state planning while looking to PRC firms to advance S&T goals. They are seeking to position China to set global trade rules and technical standards and are developing China's national economic security toolkit and an unconventional use of antitrust, technical standards, investment, and intellectual property (IP) tools to help PRC firms expand globally. See CRS In Focus IF13204, China's 15th Five- Year Plan: S& T and Economic Priorities.