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Despite the domestic slowdown and intensifying trade tensions with the United States, China announced an ambitious GDP growth target for 2025, namely “about 5%.
The figure matches Beijing’s goals over the past two years, announced in the government’s annual “work report” that it has reviewed its achievements last year and its economic goals and policies for 2025.
Growth figures that match market expectations show that Beijing’s determination to maintain growth in the face of new trade hostilities with the United States has imposed additional tariffs on China this week.
But some analysts say the fiscal spending measures announced in the report are less than market expectations, as the years-long real estate crisis continues to pressure domestic consumption.
Prime Minister Li Qiang, the second Chinese official, published the report on Wednesday until thousands of delegates gathered in the lobby in Beijing to attend the annual meeting of the National People’s Congress, China’s Rubber Stamp Parliament.
Lee said 5% of the targets were to “stabilize employment, prevent risks and improve people’s health” and to achieve the necessary goals of “long-term development goals.”
Hong Kong’s Hang Seng Seng China Enterprise Index rose as much as 2.6% on Wednesday, while China’s CSI 300 index Shanghai and listed stocks rose as much as 0.4%.
Lee set a budget deficit target of 4% of GDP, up from 3% in previous years, the highest figure in recent decades. To stimulate the economy, the work report said the government will “adopt more aggressive fiscal policies.”
Xin-Yao Ng, director of Asian Equity Investment at Aberdeen, said the government is clearly committed to promoting the domestic economy, but “the most important part is how they allocate their spending.”
The work report also targets inflation at 2% in 2025, below 3%, the lowest figure since 2003, an acknowledgement of deep putting pressure on the country.
“A growth target of 5% seems to be an ambition, not a strict policy goal,” said Eswar Prasad, an economist and China expert at Cornell University.
“China needs a well-targeted set of fiscal and monetary policy measures, but these must be accompanied by reform measures to revitalize productivity and reposition the government’s attitude towards private enterprises.”
Some analysts say specific fiscal stimulus measures, such as 30 billion yuan ($40 billion) of consumer goods trade subsidies, are not as large as expected.
Beijing also announced that the 1.3tn rmb4.4tn of special local government bonds for infrastructure and other central government bonds exceeded expectations, and were less.
“The fiscal figures are disappointing,” Shan said, but added that the government could increase or accelerate bond issuance later this year. She said exports need to be “surprising” to reach GDP growth targets.
Since Donald Trump took office in January, the U.S. has imposed an additional 20% tariff on Chinese exports and threatened further measures.
China this week retaliated against U.S. agricultural and energy exports and the implementation of export controls and security measures against U.S. companies.
Beijing also announced that its defense budget rose 7.2% to 1.78tn in 2025, which coincides with the average growth over the past decade but exceeds the overall increase of central government spending by 6.9%.
Analysts say China’s military spending may be much higher than reported. Beijing is “40% to 90% more than what was announced in its public defense budget,” although Western experts estimate it is about 30%.
Taylor Fravel, head of the security research program at Massachusetts Tech, said people’s Liberation Forces’ expansion of its equipment arsenal (which has been going on for thirty years) could continue to be a cost burden, noting that “maintenance costs” will continue “for decades.”
Other reports by Wenjie ding in Beijing
