China has set its GDP growth target for 2025 at “around 5%,” a figure announced by Premier Li Qiang during the opening session of the National People’s Congress (NPC) in Beijing on Wednesday. In the annual government work report, Li outlined strategies to stabilize economic growth by enhancing domestic demand and creating 12 million new urban jobs. Economists view the 5% growth target, consistent with the figure for 2024, as ambitious and potentially difficult to achieve. Last year, China met its target thanks to a last-minute surge in exports, which rose by 10.7% in December, resulting in a record trade surplus of $1 trillion. However, with a renewed trade conflict between the U.S. and China as Donald Trump begins his second term, boosting the economy through trade may prove more challenging this year. Recently, Trump increased tariffs on most Chinese goods to 20%, with some duties reaching as high as 45%. In response, China quickly implemented its own retaliatory tariffs, imposing duties of up to 15% on agricultural products.
Alicia García-Herrero, chief economist for Asia Pacific at investment bank Natixis, remarked that the target is “very ambitious” and may be “non-reachable” without a more substantial stimulus, particularly given the heightened tariffs. For 2025, China faces the challenge of shielding its economy from the repercussions of the trade war. Economists have urged policymakers to enhance stimulus measures, particularly those aimed at increasing consumer spending to drive domestic demand.
In the work report presented on Wednesday, Li emphasized the government’s intention to “make domestic demand the main engine and anchor of economic growth.” However, specific details on how this would be achieved were limited, apart from a commitment to issue 300 billion yuan ($41.2 billion) in special treasury bonds to support consumer goods trade-in programs. This amount is double that of last year’s subsidies scheme, which allowed consumers to trade in old household appliances for discounts on new purchases, resulting in 240 billion yuan in sales.
Beijing is increasingly prioritizing the development of domestic innovation and high-tech industries, which Xi Jinping refers to as “new quality productive forces.” Addressing nearly 3,000 delegates at the NPC’s opening session, Li stated that the government would “establish a mechanism to increase funding for industries of the future,” including artificial intelligence and 6G technology. The emphasis on “new quality productive forces,” such as electric vehicles and battery storage, aligns with China’s green ambitions. However, experts cautioned that a key climate commitment in the report—to reduce carbon intensity by 3% per unit of GDP—was inadequate. Carbon intensity measures the amount of CO2 emitted per dollar of economic activity, and the significant presence of heavy industries in China’s economy poses ongoing challenges.