China sets lowest growth target in three decades at 4.5% to 5% for 2026 , signaling a major policy shift amid deflation and U.S. trade tensions. The world's second-largest economy is downgrading expectations from the previous 5% target, marking the most modest goal since the early 1990s. Beijing maintains a 4% budget deficit, the highest on record since 2010, while keeping inflation targets at 2% despite flat price growth last year. Analysts view this as a strategic pivot from quantity-focused growth toward quality-driven development, reducing incentives for local officials to pursue wasteful projects. The move reflects persistent deflationary pressures, weak consumer demand, and structural economic challenges. China aims to add 12 million urban jobs while stabilizing unemployment around 5.5%, emphasizing employment stability over aggressive expansion targets.