China has set its GDP target for 2025 at “around 5%”, a figure which was unveiled by Premier Li Qiang at the opening session of the National People’s Congress (NPC) in Beijing on Wednesday.
Li announced the growth target in the annual government work report, which also outlined plans to stabilise economic growth by boosting domestic demand and creating 12m new urban jobs.
Economists believe that the 5% growth target, which is in line with 2024’s figure, will be challenging. China reached its target last year with a last-minute export boom. Exports surged by 10.7% in December, pushing China’s trade surplus to a record $1tn. But with a new US-China trade war as Donald Trump settles into his second term in the White House, this year it will be harder to boost the economy through trade.
This week, Trump doubled tariffs on most Chinese goods to 20%, with some duties reaching 45%. China swiftly announced retaliatory tariffs of its own, imposing duties of up to 15% on agricultural goods.
“The target is very ambitious,” said Alicia García-Herrero, the chief economist for Asia Pacific at investment bank Natixis. She said it was “non-reachable” without a bigger stimulus, especially in light of the increased tariffs.
China’s challenge for 2025 will be shielding its economy from the impact of the trade war. Economists have urged policymakers to boost stimulus measures, especially those that would put more money in consumers’ pockets to boost domestic demand.
In Wednesday’s work report, Li said the government wanted to “make domestic demand the main engine and anchor of economic growth”. But details on how the government would do this were scant, save for a pledge to issue 300bn yuan ($41.2bn) of special treasury bonds to support consumer goods trade-in programmes. That is double the amount that was issued to support last year’s subsidies scheme, in which consumers can trade in old household appliances such as microwaves and rice cookers to get a discount on new purchases. Officials said that last year’s scheme resulted in 240bn yuan of home appliances sales.
Beijing is increasingly focused on the need to develop domestic innovation and hi-tech industries, fields which Xi Jinping, China’s leader, calls “new quality productive forces”. Addressing the nearly 3,000 delegates who gathered in Beijing’s Great Hall of the People for the opening session of the NPC, Li said the government would “establish a mechanism to increase funding for industries of the future” such as artificial intelligence and 6G.
The push for “new quality productive forces”, which include electric vehicles and battery storage, is linked to China’s green ambitions. But experts warned that a key climate pledge in Wednesday’s report – to reduce carbon intensity by 3% per unit of GDP – was insufficient.
Carbon intensity refers to how much CO2 is emitted for every dollar of economic activity. The prominence of heavy industries in China’s economy means that China’s carbon intensity has traditionally been much higher than other countries. In 2023, it produced twice as much CO2 per dollar as the global average. Achieving the 3% target announced on Wednesday means that China would miss its target of reducing carbon intensity by 18% between 2021 and 2025, said Zhe Yao, a global policy adviser at Greenpeace East Asia.
“Despite the record expansion of renewables, an inconvenient truth is that China’s economy hasn’t become much more energy efficient in recent years … As policymakers continue to look for new drivers of growth, they shouldn’t forget the need for a new mode of growth that is less dependent on energy,” Yao said.
The government work report also said China would “firmly advance” the cause of unification with Taiwan and “refine the mechanisms for strengthening mutual support between civilian sectors and the military”, a reference to the civil-military fusion strategy that has caused alarm in the west.
Another official report released on Wednesday said China would increase defence spending by 7.2% this year, the same as last year’s figure. China spends less than 2% of its GDP on the military, a much lower share than the US, whose defence spending is over 3% of GDP.
The NPC’s annual session will run until 11 March. The Chinese People’s Political Consultative Conference, a high level advisory body, is also meeting in Beijing this week.
