BEIJING — China is wrapping up its biggest political event of the year on Tuesday leaving one question unanswered: How far will it go to try to revive economic growth in 2025?
A recurring theme throughout the weeklong meeting of the nearly 3,000-member National People’s Congress was the need to boost investment and consumer spending.
How much will be done to translate words into action will only become clear in the months ahead as the ruling Communist Party juggles priorities. What is clear is that a trade war with the United States has left the outlook for the coming months uncertain.
At stake is the health of the world’s second largest economy, a major exporter of products to countries around the world and an important market for foreign companies from Apple to Volkswagen. A prolonged property crisis has sapped consumer and business confidence, depriving the economy of its past vitality. Now, a tariff war unleashed by U.S. President Donald Trump is compounding those problems.
China holds back on major stimulus — for now
The Congress opened with the announcement of an economic growth target of “about 5%” for this year, a level that analysts said would be difficult to achieve with the measures detailed during this year’s Congress.
They include borrowing more money for a slew of initiatives, such as giving 300 billion yuan ($41.3 billion) in rebates to consumers who trade-in old cars and appliances for new ones. But much of the borrowing will go to supporting the housing market and local governments weighed down by debt.
“It is unclear how much of a jolt this budget will provide to underlying domestic demand and reflation efforts, despite the sizeable rise in the deficit,” Jeremy Zook, the lead China analyst for Fitch Ratings, said in a report.
Chinese President Xi Jinping arrives for the closing ceremony of the Chinese People’s Political Consultative Conference held at the Great Hall of the People in Beijing, Monday, March 10, 2025. Credit: AP/Ng Han Guan
The ambitious 5% growth target signaled to analysts that more stimulus may be coming. Last year, the government surprised stock markets with various moves beginning in September to push growth up to 5%, also the target in 2024.
Finance Minister Lan Fo’an told journalists covering the Congress that the government had sufficient tools in reserve to deal with external or domestic uncertainties.
Xi seeks private sector help, within limits
Chinese President Xi Jinping seems bent on reinvigorating private businesses, which provide a large share of growth and jobs in the country’s state-dominated economy. Years of regulatory crackdowns have shaken the confidence of entrepreneurs and other investors.
The Congress reviewed comments on a law meant to improve the environment for private enterprises by regulating aspects of market access, financing, competition and property rights protection, among others.
Delegates file out after the closing ceremony of the Chinese People’s Political Consultative Conference held at the Great Hall of the People in Beijing, Monday, March 10, 2025. Credit: AP/Ng Han Guan
Xi aims to send a “message to entrepreneurs, but also to local governments and regulators, that the private sector’s important and it’s necessary,” Neil Thomas, a fellow on Chinese politics at the Asia Society Policy Institute, said ahead of the congress.
Private companies will also gain access to a higher share of loans than before, and financing for private businesses raised through bond issuance will be expanded, Chinese Premier Li Qiang said in his work report.
The foreign minister says the US shouldn’t bully
Much rides on how far Trump pursues his trade wars with China and other countries.
China has diversified its export markets in recent years, but the U.S. remains a vital trading partner. The greater fear is not the tariffs themselves but the health of the U.S. economy and demand for Chinese products, said Alicia Garcia Herrero, the chief Asia-Pacific economist for Natixis investment bank.
Trump has raised tariffs on imports from China twice since taking office in January. China has shown no sign of backing down.
“If the American side goes further down this wrong path, we will fight to the end,” Commerce Minister Wang Wentao told journalists during the Congress.
Asked about Trump’s “America First” policy, China’s Foreign Minister Wang Yi said the law of the jungle would reign if all countries adopted a “my country first” approach.
“A big country should honor its international obligations and fulfill its due responsibilities,” he said to journalists at the Congress. “It should not put selfish interests before principles, still less wield its power to bully the weak.”
A Chinese buzzword makes a comeback
The government said in its annual report that it would address what it considers unproductive “rat-race” competition, invoking a term that was a buzzword in China five years ago among stressed-out younger workers.
The government is applying the term “neijuan” — more commonly translated as “involution” — to companies and local governments rather than workers. A proliferation of green energy firms, for example, has led to gluts in solar panels and other equipment and fierce price wars that ultimately harm the industry.
“Their strategies are similar, which leads to extremely cruel competition,” Chinese tech leader Lei Jun, the CEO of Xiaomi and a delegate to the Congress, told state media.
The solutions are unclear, experts say, noting that government subsidies for green energy helped create the problem by encouraging so many start-ups.
