China has set its GDP growth target at around 5% for 2025, maintaining the same goal for the third consecutive year, according to the Government Work Report presented at the National People’s Congress. This decision underscores the government’s focus on steady economic growth while navigating global uncertainties and domestic challenges.
The report highlights China’s strategic shift toward stimulating domestic demand and improving living standards. Premier Li Qiang emphasized that the 5% growth target aligns with the country’s long-term economic objectives and demonstrates a commitment to overcoming obstacles. Economists view this target as a stabilizing factor for market expectations and investor confidence.
A significant change in this year’s work report is the adoption of a “more proactive fiscal policy.” The government has raised its projected fiscal deficit-to-GDP ratio to around 4%, up from 3% last year the highest level since records began in 2010. This signals an increase in public spending aimed at boosting economic activity.
China plans to issue 1.3 trillion yuan ($179 billion) in ultra-long-term special treasury bonds, up from 1 trillion yuan in 2024. Additionally, 4.4 trillion yuan in special local government bonds will be issued, alongside 500 billion yuan in special treasury bonds to support state-owned commercial banks.
On the monetary policy front, China will pursue a “moderately loose” approach for the first time in over a decade, shifting from a “prudent” stance maintained since 2011. This will include timely cuts to interest rates and the reserve requirement ratio, along with structural monetary policy tools to support the real estate and stock markets.
The government is also prioritizing consumption by introducing measures such as child care subsidies, an increase in minimum basic old-age benefits, and a 300 billion yuan allocation for consumer goods trade-in programs. These efforts aim to boost household confidence and spending.
China has set a consumer price index growth target of around 2%, the lowest inflation target in two decades, reflecting policymakers’ focus on demand recovery. Additionally, regulatory reforms will facilitate private sector growth and innovation in internet and cultural industries.
As China continues to adjust its economic strategies, the focus remains on fostering stability and long-term growth in a complex global landscape.
