On Thursday, backed by China’s political leadership in Beijing, President Xi Jinping unveiled a sweeping blueprint for the country’s economic and strategic direction over the next five years.

The gathering of nearly 3,000 delegates at the Great Hall of the People marks one of the most closely watched political events in China’s calendar, according to Reuters. This year’s meeting comes at a delicate moment for the world’s second-largest economy, which is navigating slowing domestic demand, geopolitical tensions with the United States, and a global economic environment increasingly shaped by technological competition and supply-chain realignment.

China’s leadership used the congress to roll out the next phase of its Five-Year Plan—an expansive framework covering economic growth targets, fiscal policy, industrial strategy, defense spending, and demographic challenges. The blueprint underscores Beijing’s determination to maintain economic stability while accelerating a long-term push toward technological self-sufficiency and strategic independence.

Moderate growth target

At the heart of the new policy framework is China’s growth objective. Beijing signaled it expects the economy to expand at a pace of between 4.5% and 5% annually in the coming period—slightly below the roughly 5% growth recorded last year.

The target reflects both caution and realism. Policymakers are attempting to manage a complex transition as the country moves away from an investment-driven growth model toward one supported more by technology, consumption, and advanced manufacturing.

To sustain activity, the government plans to maintain steady fiscal support. Officials set a budget deficit target of about 4% of gross domestic product, roughly in line with last year’s level, signaling that stimulus policies will continue but without the massive expansion seen during previous downturns.

The decision suggests Beijing wants to keep fiscal support in place while avoiding the risks associated with excessive debt accumulation in local governments and state-owned enterprises. Economists say the moderate growth target also reflects lingering structural weaknesses that emerged after the COVID-19 pandemic, including weak household spending, a fragile property sector, and uneven industrial demand.

Technology Push to intensify amid U.S. rivalry

A major focus of the plan is China’s push to dominate strategic technologies. Premier Li Qiang told lawmakers that China must “seize the commanding heights of science and technological development,” signaling that investment in advanced industries will remain central to economic policy.

Key areas highlighted include artificial intelligence, quantum computing, advanced semiconductors, and next-generation telecommunications infrastructure. The push comes as competition with Washington intensifies over control of the technologies expected to define future economic and military power.

Restrictions imposed by the United States on exports of advanced chips and manufacturing equipment to China have accelerated Beijing’s efforts to build domestic capabilities across the semiconductor supply chain.

China also holds a strategic advantage in rare earth minerals—materials essential for electric vehicles, defense systems, renewable energy equipment, and consumer electronics. As the world’s largest producer of these critical materials, Beijing is positioning itself to maintain leverage in global technology supply chains.

China aims to secure an edge in industries ranging from batteries to aerospace components by strengthening its grip on rare earth production and refining.

Defense spending rises to boost military modernization

Alongside economic reforms, China’s leadership reaffirmed plans to strengthen the country’s military capabilities. The government announced a 7% increase in defense spending for 2026, continuing a steady expansion of the military budget over the past decade.

The increase will fund efforts to enhance combat readiness and accelerate the development of advanced military technologies, including hypersonic weapons, cyber capabilities, and space-based systems.

Beijing has set a long-term goal of completing the modernization of the People’s Liberation Army by 2035. Military analysts say the push reflects China’s broader ambition to project greater power in the Indo-Pacific region, particularly as tensions persist around Taiwan and maritime disputes in the South China Sea.

Strengthening the financial system

The government also outlined measures aimed at stabilizing the financial sector and preventing systemic risks.

Beijing plans to inject roughly $44 billion into state-owned banks this year, providing additional capital to support lending and strengthen balance sheets.

The move is designed to ensure financial institutions can continue funding strategic industries while absorbing potential losses tied to property developers and local government financing vehicles.

Officials also said more financing will be directed toward technology companies and advanced manufacturing firms as part of the broader push to upgrade China’s industrial base.

Demographic crisis pushes pro-birth policies

China’s shrinking population remains one of the most pressing challenges confronting policymakers. After decades of strict population controls under the one-child policy, the country now faces a rapidly ageing population and declining birth rates.

In response, the government pledged to create a “childbirth-friendly society” over the next five years. Officials said they will expand support for childcare, education, and healthcare while addressing employment pressures that discourage young families from having children.

Demographers warn that population decline could weigh heavily on China’s long-term economic growth by shrinking the workforce and increasing pension and healthcare burdens.

Food security takes center stage

Food security was another major theme in the government’s roadmap. China plans to increase grain production capacity to roughly 725 million metric tons between 2026 and 2030. The emphasis reflects Beijing’s growing concern about supply-chain vulnerabilities in an increasingly fragmented global economy.

Despite being one of the world’s largest agricultural producers, China remains heavily dependent on imports of certain key commodities. Soybeans, for example, are widely imported for livestock feed, with the United States ranking among China’s largest suppliers.

Strengthening domestic agricultural output is therefore viewed as a strategic priority, particularly amid global trade tensions and climate-related disruptions.

Climate policy shifts toward carbon intensity

Environmental policy also featured prominently in the government’s plans.

Beijing announced that it will accelerate efforts to reduce the carbon intensity of its economy over the next five years. The shift marks a subtle change in policy focus: instead of targeting reductions in overall energy intensity, the government will measure progress more directly through cuts in carbon emissions relative to economic output.

The strategy aligns with China’s broader climate commitments while still allowing room for economic expansion.

Together, the announcements from the National People’s Congress highlight the balancing act confronting China’s leadership. The government must stabilize economic growth, manage demographic decline, reduce financial risks, and compete technologically with the United States—all while maintaining political control and social stability.

For President Xi, the new Five-Year Plan represents not just an economic programme but a blueprint aimed at reshaping China’s global position.

Nigeria’s business environment strengthened significantly in February 2026, with the latest Business Confidence Monitor showing firms reporting the strongest operating conditions since the index was introduced.

The improvement came even as fresh data from the central bank showed banks becoming more cautious in lending to the private sector, underscoring the complex state of the economy, where business sentiment is improving but financial conditions remain tight.

The February Business Confidence Monitor released by the Nigerian Economic Summit Group (NESG) shows the Current Business Performance Index rising to a record 117.2 points. The reading marks a sharp jump from 105.8 points recorded in January 2026 and also exceeds the 111.5 points recorded in February 2025.

The index, which measures business conditions across major sectors of the economy, indicates broad-based expansion, suggesting that firms are experiencing improved demand conditions and stronger operational performance at the start of the year.

Broad-based expansion across sectors

According to the NESG report, all five major sectors of the economy expanded in February, reflecting a synchronized improvement across production, services, and trade.

The non-manufacturing sector posted the strongest performance, with its index rising to 128.9 points from 115.3 in January, highlighting strong activity in construction, utilities, and other industrial services.

Manufacturing also recorded notable growth, with the index climbing to 121.1 points from 115.8 in the previous month. The expansion was largely driven by strong output in food, beverage, and tobacco manufacturing as well as chemical and pharmaceutical production. Pulp, paper, and paper products also recorded stronger activity during the month.

However, the data also revealed pockets of weakness within the industrial segment. Cement production, as well as plastic and rubber product manufacturing, slipped into contraction territory, pointing to uneven demand conditions within the sector.

The services sector maintained its expansion trajectory, improving to 109.2 points from 102.1 in January. Growth in services was supported by stronger activity in broadcasting, financial services, telecommunications, real estate, and information services.

Trade recorded one of the sharpest rebounds in the report, rising to 108.7 points from 92.7 in January. The improvement indicates stronger retail and wholesale activity as consumer demand showed signs of recovery after earlier weakness.

Agriculture also returned to expansion territory with a reading of 104.8 points, up from 99.5 in January. Improvements in crop production, as well as livestock and agro-allied activities, supported the recovery.

Persistent structural constraints

While the report paints a picture of strengthening business activity, it also highlights structural challenges that continue to weigh on productivity and investment.

Businesses continue to cite insecurity, poor infrastructure, high operating costs, and limited access to financing as major constraints to expansion, particularly in agriculture and manufacturing, where production is highly sensitive to logistics and input costs.

Power supply disruptions, transportation bottlenecks, and rising costs of imported inputs remain key concerns for manufacturers, many of whom are still navigating the effects of currency volatility and high interest rates.

Despite these structural hurdles, businesses remain highly optimistic about the outlook for the coming months.

The NESG Future Business Expectation Index rose to 135.5 points in February 2026, up from 124.7 points in January and 128.3 points recorded in February last year.

Manufacturing firms expressed the strongest optimism, with the sector recording an expectations index of 164.3 points. Trade followed closely at 163.1 points, reflecting expectations of stronger consumer demand and increased inventory turnover.

Non-manufacturing businesses also reported strong confidence with an index of 151.0 points. Agriculture posted 137.2 points, while the services sector recorded the lowest but still expansionary outlook at 117.1 points.

The strong expectations index suggests businesses anticipate continued improvements in demand, production, and investment activity in the near term.

Separate data compiled by S&P Global and released through the Stanbic IBTC Bank Purchasing Managers’ Index support the narrative of improving economic activity.

The PMI rose to 53.2 in February from 49.7 in January, signaling a return to expansion for Nigeria’s private sector. In PMI methodology, readings above 50 indicate improving business conditions compared with the previous month.

The data suggests companies increased output and new orders in February, pointing to strengthening economic momentum early in the year.

Bank lending shows signs of caution

However, the positive sentiment among businesses contrasts with developments in the financial sector.

New figures released by the Central Bank of Nigeria show that credit to the private sector declined in January 2026, indicating that banks remain cautious about extending loans even as economic activity begins to recover.

According to the central bank’s latest monetary and credit statistics, private sector credit fell by N590 billion to N75.24 trillion in January, down from N75.83 trillion in December 2025.

On a year-on-year basis, lending also declined compared with the N77.38 trillion recorded in January 2025.

The figures suggest that the banking sector is still adopting a conservative approach to lending, reflecting concerns about credit risks, high interest rates, and lingering economic uncertainty.

Private sector credit had previously peaked at N78.07 trillion in April 2025 before trending downward in subsequent months. The lowest level within the past year was recorded in September 2025 at N72.53 trillion, highlighting volatility in credit conditions.

The decline in private sector credit coincided with a broader moderation in liquidity across the financial system.

Net Domestic Credit fell slightly to N109.43 trillion in January 2026 from N110.06 trillion in December.

Net credit to the government also edged lower to N34.19 trillion from N34.22 trillion in the preceding month.

Nigeria’s broad money supply, measured by M3, declined to N123.36 trillion in January from N124.4 trillion in December, indicating tighter liquidity conditions within the banking system.

This tightening could partly explain the slowdown in lending, as banks balance regulatory requirements with risk management considerations.

Policy balancing act for the central bank

The credit figures come amid ongoing efforts by the central bank to strike a balance between controlling inflation and supporting economic growth.

In September 2025, the Monetary Policy Committee reduced the benchmark Monetary Policy Rate by 50 basis points to 27 per cent, marking the first easing step after a prolonged period of aggressive tightening.

The MPC retained the rate at 27 per cent in November 2025 but adjusted the interest rate corridor in a move designed to discourage banks from parking excess liquidity at the central bank.

Other key parameters remained unchanged, including the Cash Reserve Ratio of 45 per cent for commercial banks and 16 per cent for merchant banks, as well as the Liquidity Ratio at 30 per cent.

The Standing Facilities Corridor was also maintained at +50 and -450 basis points around the benchmark rate.

The policy adjustments were intended to push banks toward lending to businesses rather than holding funds in risk-free placements at the central bank.

A mixed economic picture

Taken together, the data present a mixed but cautiously positive outlook for Nigeria’s economy.

Business confidence is strengthening, and private sector activity is expanding, suggesting that companies are seeing improving demand and operational conditions.

However, the decline in private sector credit indicates that financial conditions remain tight and that banks are still careful about extending loans. This factor could slow investment and expansion if it persists.

The situation now presents the challenge of ensuring that improving business sentiment translates into sustained economic growth, supported by adequate credit flows and structural reforms that address longstanding obstacles to productivity.