China Sticks to 5% Growth Target Despite Trade War/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ China has set an economic growth target of “around 5%” for 2025, despite the escalating trade war with the U.S. The target, announced at the National People’s Congress, reflects Beijing’s push to stabilize its economy amid rising U.S. tariffs, a property crisis, and weak consumer demand. China’s defense budget will also rise 7.2%, while the government plans to boost domestic spending through consumer rebates and fiscal stimulus.
China’s Economic Outlook: Quick Look
- Growth Target: China aims for “around 5%” GDP growth in 2025.
- Trade War Impact: Trump’s 20% tariffs could hurt exports.
- Domestic Focus: Beijing plans to boost consumer spending.
- Defense Budget: Military spending rises 7.2% to $245 billion.
- AI & Innovation: China prioritizes AI, smart tech, and semiconductors.
- Deflation Fears: Inflation target lowered from 3% to 2%.
China Sticks to 5% Growth Target Despite U.S. Trade War
China Sets Bold Growth Goal Amid Economic Challenges
At the opening session of China’s National People’s Congress on Wednesday, Premier Li Qiang announced an economic growth target of “around 5%” for 2025.
While the figure matches last year’s goal, analysts warn that it will be harder to achieve due to rising U.S. tariffs, a sluggish property market, and weak consumer demand.
“An increasingly complex and severe external environment may exert a greater impact on China in areas such as trade, science, and technology,” the government’s economic report stated.
U.S. Tariffs Pose New Threat
- The U.S. is one of China’s largest export markets.
- The tariffs could hurt manufacturers, forcing Beijing to ramp up domestic spending.
- China’s GDP grew 5% in 2024, but the IMF projects a slowdown to 4.6% in 2025.
Beijing’s Plan to Stimulate the Economy
To counter these headwinds, China is increasing government spending and expanding consumer incentives.
- The fiscal deficit will rise from 3% to 4% of GDP.
- 1.3 trillion yuan ($180 billion) in long-term bonds will be issued to support economic stimulus.
- Consumer rebate programs for cars and appliances will double in size.
Despite these measures, economists remain skeptical. Julian Evans-Pritchard of Capital Economics said:
“The degree of support is more modest than it may appear… it will be difficult to prevent growth from slowing this year.”
Defense Budget Jumps 7.2%
China also announced a 7.2% increase in military spending, raising its defense budget to $245 billion—second only to the United States.
- The increase comes amid tensions with the U.S. over Taiwan and the South China Sea.
- China has accelerated military modernization to counter U.S. influence in the Indo-Pacific.
Tech & AI Innovation a Priority
As part of its long-term strategy, China is investing heavily in artificial intelligence and semiconductor production.
The government report outlined plans to:
- Develop large-scale AI models.
- Expand smart manufacturing, robotics, and connected vehicles.
- Reduce reliance on foreign technology exports—especially from the U.S.
This aligns with President Xi Jinping’s goal of making China a global leader in AI and advanced tech.
China Faces Deflation Risks
China lowered its inflation target from 3% to 2%, signaling concerns about deflation.
- Consumer spending remains weak, despite efforts to boost demand.
- Property market troubles continue to drag down economic growth.
What’s Next?
- China will finalize its economic policies in the coming weeks.
- U.S.-China trade tensions may worsen if Trump announces new tariffs on April 2.
- Analysts will watch for further stimulus measures if economic growth slows.
Bottom Line
Despite rising trade tensions, a slowing economy, and weak consumer confidence, China is holding firm on its 5% growth target. However, whether Beijing can achieve it without stronger stimulus measures remains uncertain.
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