China commenced its National People’s Congress on Wednesday, setting government priorities for the year. The key focus areas in Premier Li Qiang’s work report included stabilizing the economy and advancing artificial intelligence applications.
Beijing also plans to address challenges in the property market and rising government debt, both of which hinder economic growth. Additionally, efforts will be made to enhance employment, public education, healthcare, and social security support.
China’s economic growth target for 2025 has been set at “around 5%,” consistent with the previous two years. In 2024, the economy experienced a 5% growth bolstered by robust exports and stimulus tactics. However, the International Monetary Fund predicts a slowdown this year, estimating a 4.6% growth rate.
A significant concern is the ongoing trade tensions with the United States. The reciprocal tariffs exchanged between Beijing and Washington threaten to reduce China’s economic output by up to 1.1 percentage points, as projected by the Maybank Investment Banking Group. Li addressed these issues, highlighting the “complex and severe external environment,” which includes rising tariffs and geopolitical tensions.
Increasing consumption stands as a key government objective. Li’s report highlighted the need to address the “inadequate domestic demand,” particularly insufficient consumption, positioning domestic demand as the primary force for economic growth.
A sluggish property market has contributed to consumer reluctance, leading to a deflationary phase that poses significant economic risks. To counter this, the government plans to raise the fiscal deficit ratio to 4%, up from 3% last year, and issue ultra-long special treasury bonds worth 300 billion yuan ($41.3 billion) for consumer goods trade-in programs.
Fostering technological self-reliance is another focal point, aligning with Chinese President Xi Jinping’s aspirations. In light of U.S. restrictions on China’s access to advanced technology, especially semiconductors, Beijing is striving to develop critical technologies domestically.
Li assured support for research and development in crucial technological areas, with a significant emphasis on the growth and utilization of AI in smart manufacturing, new-energy vehicles, and robotics.
Addressing the property market slump and local government debt is also a priority. The recent crisis in the real estate sector arose when the government restricted excessive borrowing by property developers, leading many to default.
Li vowed that measures will be taken to stabilize the real estate market, such as removing property transaction restrictions and improving real estate financing for timely project completions. Additionally, he stated the central government would focus on managing local government debt, particularly the “hidden debts.”
China’s defense budget has increased by 7.2% this year, mirroring last year’s percentage rise. Despite criticisms, a National People’s Congress spokesperson clarified that the defense spending remains measured, maintaining under 1.5% of GDP.
Possessing the world’s largest armed forces and the second-largest military budget, following the U.S., Beijing seeks to affirm its territorial ambitions and challenge U.S. influence in Asia.
On Taiwan—a self-governed democracy that China claims—Beijing’s position remains unchanged. The government work report reiterated intentions to resolve the “Taiwan question,” implying aspirations to bring the island under Chinese control. The report also articulated strong opposition to separatist activities aimed at Taiwan’s independence and called against foreign interference in cross-strait relations.
