The news: China set its lowest GDP growth target in over three decades, a troubling sign as the country struggles to shake off its economic malaise.

Beijing is targeting 4.5% to 5% GDP expansion, the lowest range since 1991, as it attempts to recalibrate the economy to rely less on exports and more on consumer spending.

The challenge: Getting consumers to spend more will be an uphill battle, especially given the government’s reluctance to spend big on stimulus and introduce policies to shore up the struggling property sector.

• Beijing reduced funding this year for a trade-in program that offered subsidies on appliance and vehicle purchases and narrowed its planned budget deficit for the year, signaling a reluctance to roll out broad stimulus measures that would juice consumer spending.
• Weaker sentiment among wealthy households is a further sign of trouble ahead: Confidence among high-net-worth individuals is currently lower than it was throughout the pandemic, while spending intentions are also declining, according to a survey by research firm Hurun.
• The government’s commitment to ending deflation in 2026 could pose an additional headwind by limiting companies’ ability to push through discounts and other promotions to encourage cautious consumers to open their wallets.

Implications for retailers: All signs point to 2026 being another difficult year for retailers operating in China. Consumers have few reasons to open their wallets, especially as the ongoing property slump weighs on households’ net worth and confidence. Sentiment and spending are unlikely to recover until the government promises stronger support—which looks unlikely to happen in the near term as Beijing focuses on managing debt and trade tensions.

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