China should consider a 4% GDP objective, focusing on employment and indebtedness in the next five years

[WORLD] A former senior economic official has urged China to adopt a more conservative annual growth target over the next five years, citing the ongoing strategic competition with the United States and the need to address entrenched structural issues at home.

Xu Lin, a longtime architect of Beijing’s five-year economic blueprints during his tenure at the National Development and Reform Commission, made the remarks as China increasingly leans on state-led planning to sustain growth amid mounting headwinds.

While some analysts forecast an annual growth rate of around 4.5 percent between 2026 and 2030, Xu suggested a more cautious target of about 4 percent over the next five to ten years. He pointed to demographic decline, waning savings and production rates, and other persistent challenges as justification for the lower projection.

China’s demographic outlook has become a major constraint on its economic potential. A greying population and falling birth rates have begun to shrink the workforce, curbing productivity and economic expansion. These demographic shifts are expected to play a key role in how future growth goals are set.

Compounding the problem is an increasingly complex global environment. The United States has imposed a series of trade restrictions and sanctions on China, especially targeting high-tech and manufacturing sectors. These measures have disrupted supply chains and injected uncertainty into China’s economic planning. In response, Beijing is pushing to diversify its economy and lessen dependence on foreign markets—a transformation that will demand both time and significant investment in emerging sectors.

Domestically, the challenges are equally pressing. High debt levels across the corporate landscape and among local governments pose risks to financial stability. Policymakers are walking a fine line as they try to curb debt while preserving growth momentum. Though reforms are underway to manage liabilities and bolster economic resilience, progress remains gradual and complex.

At the same time, economic planners are looking to structural reforms and innovation as pathways to future growth. Initiatives to boost research and development, upgrade the industrial sector, and expand into advanced technologies—such as artificial intelligence and clean energy—are central to China’s long-term strategy.

Xu’s recommendation to temper growth expectations reflects a pragmatic view of the evolving economic climate. Achieving a balance between near-term expansion and long-term sustainability will be crucial as China navigates internal challenges and external pressures. The next few years may prove pivotal in shaping the country’s economic trajectory and its global standing.