High-quality development took center-stage at this year's parliamentary meeting of the National People's Congress (NPC) and the National Committee of the Chinese People's Political Consultative Conference (CPPCC). Premier Li Qiang delivered his government work report to the delegates at the NPC opening session on March 5.
The Chinese government set the GDP growth target for this year again at an ambitious “around 5%”, as well as the highest deficit ratio in history of 4% this year, allowing for more government spending than under the traditional 3% as the country tries to meet its goals for economic growth and offset U.S. tariff hikes. The single percentage point increase in the deficit ratio represents a rise of CNY1.6 trillion in the country’s overall deficit level for a ceiling of CNY5.66 trillion. After adopting a “proactive” fiscal policy for 16 consecutive years, this year’s work report shifted to pledge a “more proactive fiscal policy”. China sets a consumer price index growth target of around 2%, marking the first inflation target below 3% in two decades. The country defense budget is set to increase by 7.2% this year, the same as in the past two years. The proportion of defense spending to China’s GDP has remained below 1.5% for many years, lower than the world average.
Much resources will be devoted to boosting consumption. According to China’s National Bureau of Statistics (NBS), final consumption expenditure accounted for 44.5% of the country’s economic growth in 2024, while consumption contributes over 65% to GDP growth in developed economies. A stronger focus on domestic demand will make China’s economy more resilient to external shocks.
China will guide its banking and insurance sectors to channel more funds into early-stage startups, long-term research and development projects, and hard tech sectors, according to Li Yunze, Director of the National Financial Regulatory Administration. An equity investment pilot program by financial asset management companies, which now covers 18 cities across the country, will be further extended to more areas this year, coupled with a plan to allow more financial institutions to participate in the initiative. Insurance funds will be encouraged to make long-term stock investments.
The report said China will also issue CNY1.3 trillion in ultra-long-term special treasury bonds this year, up from CNY1 trillion for 2024, and issue special local government bonds worth CNY4.4 trillion, compared with CNY3.9 trillion last year. Additionally, CNY500 billion of special treasury bonds will be issued to support large state-owned commercial banks’ replenishment of capital. This year’s new government debt, the report said, will total CNY11.86 trillion, CNY2.9 trillion more than last year, a notably higher level of spending. “The strength of fiscal policy has increased considerably, reflecting a significant change in fiscal philosophy,” said Luo Zhiheng, Chief Economist at Yuekai Securities. The report places significance on boosting consumption and improving people’s living standards, and, for the first time, listed stabilizing the real estate and stock markets as one of the major annual tasks. The report called for macro-economic policies to be “people-oriented”, vowing to provide child care subsidies, increase the minimum basic old-age benefits for rural and non-working urban residents by CNY20 per month, and allocating CNY300 billion of ultra-long-term special treasury bonds to consumer goods trade-in programs.
The report highlighted that the country will improve self-reliance and strength in science and technology. Among the country's major tasks for 2025, the report vows to “fully leverage the strengths of the new system for mobilizing resources nationwide to intensify the push for breakthroughs in core technologies in key fields and research and development advancements in frontier and disruptive technologies, and accelerate the implementation of and forward-looking planning for major science and technology projects.” President Xi Jinping called for strengthening the role of education in supporting China’s sci-tech sector and talent development, so that the nation can see its talent flourish, everyone can realize their potential, and every talent is put to the best use.
This year is the last year of the current five-year plan and efforts will be made to achieve the targets set in the plan and to formulate the targets of the 15th Five Year Plan (2026-30). Jiang Ying, Deloitte China Chair and Member of the CPPCC National Committee, believed that in 2025, the challenges China's economy will face, brought about by the reshaping of the international order and geopolitical conflicts, are becoming increasingly complex. "To address these challenges, China will emphasize achieving high-quality growth driven by domestic demand and technological innovation," she stated.
Green development, including green building renovation and innovation in the photovoltaic (PV) industry, were the focus of some panel discussions during the two sessions. Promoting China's independent PV innovation and the development of original technology is the top priority in the country's green development, Zhong Baoshen, NPC Deputy and Chairman of Longi Green Energy Technology Co, told the Global Times. Zhong noted that China's new-energy industry has turned from a follower into a global leader. However, it now faces opposition from some countries that use zombie patents and dormant patents to weaponize intellectual property rights to hinder the development of Chinese new-energy enterprises with original technological capabilities, ultimately aiming to erode the global competitive edge of China's new-energy sector. Strengthening the capability of independent innovation and developing original technology is an inevitable choice to break through the current bottleneck, Zhong said.
This overview is based on reports by the China Daily, the Global Times and the South China Morning Post.
