On February 28th, 2025, an aerial view of a new urban district in South Kyoto, southern China.
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China set its 2025 GDP growth target at “about 5%” on Wednesday to launch its annual Congressional meeting amid growing trade tensions with the US.
Beijing raised its fiscal deficit target to “about 4%” of GDP from 3% last year.
According to data accessed via Wind information, the 4% deficit marks the highest record dating back to 2010. In 2020, the previous high was 3.6%, data show.
According to Reuters, the government’s report submitted plans to issue Ultra’s long-term special financial obligations worth 1.3 trillion yuan in 2025.
According to the Asian Association’s Policy Research Institute, Beijing has implicitly acknowledged the sluggish domestic demand and revised its annual consumer price inflation target to about 2% (lowest in over 20 years) (lowest in over 20 years).
The new inflation targets act as ceilings rather than realising targets. Consumer prices rose just 0.2% in 2024 and 2023, but producer prices have fallen for more than two years.
The country’s annual parliament gathering known as “two sessions” began on Tuesday with the highest advisory body, the opening ceremony of the Chinese political council meeting.
The National People’s Assembly will begin its meeting on Wednesday and is expected to close the annual session on March 11th. Foreign Secretaries and Secretaries of several economic sectors will hold interim press conferences.
Tit-for-Tat Tariff
This year’s Congressional meeting is now placing an additional 20% duties in about a month as Trump imposes new tariffs on Chinese goods.
Beijing responded on Tuesday with up to 15% extra charges for certain US products starting March 10, as well as restrictions on exports to 15 US companies. China has also added 10 US companies to its unreliable entities list that can limit its ability to do business in Asian countries. Many of the appointed US businesses work in aerospace, defense, or drones.
“We want to work with the US side to address each other’s concerns through dialogue and consultation, based on mutual respect, equality, reciprocity and mutual improvement,” Lou Kinjian, spokesman for the 14th National People’s Congress’ third session, told reporters Tuesday morning.
“At the same time, we will never accept any acts of pressure or intimidation and will firmly defend the interests of sovereignty, security and development,” he said in Mandarin through official translations.
Stimulation and technology
An increase in US duties considers exports to China. This is a rare, bright place in an economy struggling with insufficient domestic demand.
The world’s second largest economy rose 5% in 2024, but retail sales growth fell sharply from 7.1% in 2023 to 3.4%. The real estate drag has been ongoing, with investment in the sector down 10.6% since last year.
Investors have been closely watching Beijing’s efforts to deal with the country’s economic slowdown after an unexpected high level of support pledge in September prompted stock rallies. Market profits have been re-evaluated after Chinese national president Xi Jinping held a rare meeting last month with entrepreneurs, including Alibaba’s Jack Ma and artificial intelligence startup Deepshek’s Lian Wenfeng.
“It is undeniable that AI technology comes with some unknown risks and challenges, bringing new tasks to areas such as security, social governance, morality, and ethics.
“China… opposes to overstretching the concept of national security and politicizing economic and technical issues,” he said.
Investors will also closely monitor Congress meetings for further comments on China’s efforts to provide artificial intelligence and the private sector with regulatory certainty.
– CNBC’s Bernice OOI contributed to this report.
