“China sets a 5% growth target amid the US trade war, focusing on domestic demand, fiscal expansion, and economic resilience. Learn how Beijing plans to navigate trade tensions and economic challenges in 2025.”
As it struggles with sluggish youth employment, persistently poor consumer demand, and a prolonged debt issue in the real estate industry, Beijing also announced a rare increase in fiscal funding, enabling its budget deficit to exceed four percent this year.
Although experts think it is ambitious given the magnitude of China’s economic issues, Premier Li Qiang’s headline growth statistic, which he unveiled at an annual Communist Party conclave, was largely consistent with an AFP survey of analysts.
As Beijing aims for two percent inflation this year, the plans call for the creation of some 12 million new employment in Chinese cities.
Beijing should “move faster to address inadequate domestic demand, particularly insufficient consumption,” according to a government work report that pledged to make domestic demand the “main engine and anchor” of growth.
Li also made the unusual announcement that China would increase its fiscal deficit by 1%, which experts say will allow Beijing greater flexibility in addressing its economic slowdown.
According to Dylan Loh, an assistant professor at Nanyang Technological University in Singapore, Beijing’s development goal would be “tough but possible.”
“If people are, in their own calculations, worried about spending — especially on big-ticket items — it is far harder to address,” he said, referring to low consumption as a “confidence issue.”
Beijing’s policies are not yet “big enough to really like significantly drive up the consumer sentiment,” according to another analyst.
“Before we can truly observe a shift in consumption patterns and retail sales trends, we must witness a very comprehensive recovery of employment, income, and the real estate market,” Yue Su, Principal Economist at The Economist Intelligence Unit, told AFP.
Following a similar action last month, US President Donald Trump placed more blanket tariffs on Chinese imports, which caused major Asian markets to reverse their losses and trade higher on Wednesday.
Trade between the two biggest economies in the world is predicted to be affected by US tariffs to the tune of hundreds of billions of dollars.
According to the government work report, “globally, changes not seen in a century are occurring at a faster pace.”
It cautioned that “protectionism and unilateralism are on the rise.”
According to the research, “… domestically, the foundation for China’s sustained economic recovery and growth is not strong enough.”
Defend yourself to the “bitter end.”
Last year, Chinese exports hit all-time highs.
As hundreds of delegates gathered in Beijing’s lavish Great Hall of the People for the opening session of the National People’s Congress, the second of China’s “Two Sessions” official gatherings this week, sentiments were tainted by a growing trade war under Trump.
Beijing pledged to fight a trade war to the “bitter end” and announced its own retaliatory measures Tuesday in response to Washington’s most recent tariff rise.
Beginning early next week, China will impose levies of up to 15 percent on a variety of US agricultural exports, including as wheat, pork, and soybeans.
Learn more about China’s Economic Growth Amid US Trade War – DoFollow Link
In contrast to Trump’s comprehensive tariffs, Beijing’s countermeasures are a “relatively muted response,” according to Lynn Song, ING’s head economist for Greater China.
According to him, “the retaliation could have been much stronger, and the risks for a stronger response are also rising with every further escalation.”
In addition to a series of robust assistance measures announced late last year, analysts predict that officials may unveil other steps to help the economy this week.
More assistance is required.
As Beijing quickly modernizes its armed forces in response to regional tensions and strategic competition with the United States, China also revealed on Wednesday a 7.2 percent increase in defense spending in 2025.
Online comments, however, lamented the spending increase as being “too little.” “To achieve world peace, we must strengthen ourselves,” someone else wrote. Analysts predict that this year will see a rise in geopolitical tensions between Beijing and Washington.
One of the main points of contention is the status of Taiwan, which is self-governing and is claimed by China as part of its sovereign territory.
The defense budget will pay for Beijing’s regular military aircraft sorties around Taiwan, which are meant to exert pressure on the democratic island’s leaders.
It also followed Trump’s proposal to cut the combined military expenditures of China, Russia, and the United States in half.
China has not approved of this plan; last month, a spokesman for the foreign ministry said that Washington should make any cuts to military spending first.
For more details on the latest developments in China-US relations, check out Socioon Blog.
