China signaled the world’s second-largest economy is entering an era of slower expansion, setting a target for gross domestic product growth of between 4.5% and 5% this year.

Office buildings in the central business district in Beijing.

Office buildings in the central business district in Beijing.

It is the lowest growth target set since at least the 1990s and follows three years in which officials called for growth of “around 5%.” If China’s economy were to expand at a pace below 5% this year, it would be the slowest growth reported by the country in more than two decades, other than during the Covid pandemic years. China said its GDP grew 5% in real terms last year, meeting its official target despite a renewed trade war with the U.S.

A lower GDP target for 2026 reflects a level of tolerance for weaker growth as China’s economy contends with muted household spending, dampened investment, and a real-estate market in the doldrums.

The less ambitious growth target also gives Chinese leaders some room to maneuver the economy through complicated geopolitical terrain—including conflict in the Middle East and the threat of further trade pressure from President Trump—while continuing to pursue Beijing’s strategic goals of technological self-reliance and advanced manufacturing.

With a record $1.2 trillion trade surplus last year, China’s growth has become increasingly uneven, creating a global imbalance that has drawn criticism from its trading partners and global institutions such as the International Monetary Fund. Exports drove China’s economic expansion in 2025 to a degree not seen since 1997, according to government data.

Grace Zhu and Xiao Xiao contributed to this article.

Write to Hannah Miao at hannah.miao@wsj.com