BEIJING – China is keeping its economic growth target at “around 5%” for 2025 despite a looming trade war with the United States and other headwinds.
The target for GDP growth was announced Wednesday in a report being presented by Premier Li Qiang at the opening session of the National People's Congress, the annual meeting of China's legislature. It reflects the government’s plans to try to stabilize growth in challenging economic times, but stop hold back on more dramatic action to supercharge it.
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The 32-page report acknowledged the challenges at home and abroad.
“An increasingly complex and severe external environment may exert a greater impact on China in areas such as trade, science, and technology,” Li said, reading parts of the report to the Congress over nearly an hour. “Domestically, the foundation for China’s sustained economic recovery and growth is not strong enough. Effective demand is weak, and consumption, in particular, is sluggish.”
The IMF has projected China's economy will grow 4.6% this year, down from 5% in 2024, according to Chinese government statistics.
The report offered some details on previously announced plans to step up stimulus for the sluggish economy this year. It outlined plans for a “more proactive fiscal policy," including an increase in deficit spending from 3% to 4% of GDP, or the size of the overall economy.
It said the government would issue 1.3 trillion yuan ($180 billion) in ultra-long term bonds, up from 1 trillion yuan last year, and that 300 billion yuan in such bonds would go toward a program launched last year that offers rebates to consumers who trade in automobiles or appliances for new ones.
Across-the-board tariffs imposed on Chinese products by U.S. President Donald Trump pose the latest threat to an economy already weighed down by a prolonged real estate slump and sluggish consumer spending and private business investment.
China’s ruling Communist Party signaled in December that it would boost stimulus this year. The U.S. tariffs have made that task more urgent, because they could crimp sales to one of China’s major export markets.
At the same time, Chinese leader Xi Jinping wants to wean the economy off its long-running dependence on the highly indebted real estate market. He is pushing economic resources into developing a more innovative, high-tech economy — and with growing restrictions on U.S. technology exports to China, one that isn't beholden to other countries for the most powerful semiconductors and other electronic components.
That has remained the overarching long-term economic goal of the Communist Party, though it has enacted various measures since September in a possible shift in emphasis toward shoring up growth in the short-term.
“A target of around 5% is well aligned with our mid- and long-term development goals and underscores our resolve to meet difficulties head-on and strive hard to deliver,” the government report said.
The party announced in December that the central bank would shift its monetary policy from “prudent” to “moderately loose" for the first time in more than a decade.
The government, following the party's leadership, is expected to borrow more this year, spend more on the consumer rebate program and possibly increase pensions and health care benefits. The question is whether it will be enough to stabilize the economy and reach its target for growth.