China’s Economic Goals and Fiscal Measures
Chinese Premier Li Qiang has set an ambitious China Sets 5% Growth Target for 2025 while delivering the annual government work report at the National People’s Congress. This marks the third consecutive year that China has aimed for this growth rate. Alongside this goal, the government has projected the highest general budget deficit in over three decades, signaling a strategy to boost domestic consumption amid external economic pressures.
According to Li’s report, China’s fiscal deficit for the year will be approximately 5.66 trillion yuan ($780 billion), equivalent to around 4% of the country’s gross domestic product (GDP). This move highlights the government’s determination to counterbalance global trade tensions and external uncertainties.
Raymond Yeung, chief economist for Greater China Sets 5% Growth Target at Australia & New Zealand Banking Group, noted that the aggressive target reflects authorities’ commitment to sustaining economic expansion despite challenges. Analysts believe that China will require strong policy support to meet this objective, given the economic headwinds and evolving global trade landscape.
Trade Tensions and Domestic Consumption Push
Li’s economic blueprint was presented a day after new tariffs were imposed on Chinese exports, potentially affecting the country’s growth trajectory. The Chinese government, however, is focused on maintaining its economic momentum. Li emphasized the need to face difficulties “head-on” and push forward, a sentiment reinforced by the frequent mention of “consumption” in the report—appearing 27 times, the highest in a decade.
Meanwhile, references to “high-quality development,” a phrase associated with China’s shift toward advanced manufacturing and technological innovation, were less frequent than in previous years. This suggests a stronger pivot toward immediate economic stabilization rather than long-term industrial restructuring.
As part of its economic strategy, China Sets 5% Growth Target plans to issue 1.3 trillion yuan ($179 billion) in special sovereign bonds. Additionally, 300 billion yuan from these funds will be allocated to a subsidy program aimed at encouraging consumer purchases, doubling the program’s size from 2024. The remaining funds will be invested in major infrastructure projects and support businesses in upgrading their equipment to drive industrial growth.
Challenges in Boosting Household Spending
Despite these significant measures, economic analysts caution that the initiatives may not be sufficient to address China’s structural economic challenges. Household consumption remains relatively low, contributing only about 45% to the country’s GDP. Encouraging domestic spending is a key priority, but the effectiveness of government subsidies and fiscal stimulus in driving sustained consumer confidence remains uncertain.
Market analysts suggest that while the proposed measures could provide short-term relief, additional steps may be necessary to stimulate demand and sustain economic momentum. With ongoing trade disputes and evolving global economic conditions, China’s ability to maintain its growth trajectory will depend on how effectively it implements its fiscal policies and supports domestic economic resilience.
