China Sets 5% GDP Growth Target for 2025
Beijing on Wednesday set its 2025 GDP growth target at around 5 percent for 2025, maintaining the same goal for the third year in a row.
The goal setting was revealed by Chinese Premier Li Qiang on the second day of the country’s annual parliamentary gathering, known as “Two Sessions.”
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To inject growth into the world’s second-largest-economy amid rising trade tension with the U.S., Beijing has raised its budget deficit target to “around 4 percent” of GDP from last year’s 3 percent, which marks the highest level since 2010.
In order to “implement a more active fiscal policy” that would continue to stabilize the housing market, Beijing will issue 1.3 trillion renminbi, or around $178.9 billion, in ultra-long treasury bonds, up from 1 trillion in 2024.
Of that, 500 billion renminbi, or around $68.8 billion, will be used to recapitalize banks.
Local governments will be issuing 4.4 trillion renminbi, or $605.5 billion, in special debt, an increase of 500 billion renminbi, or $68.8 billion, from last year’s quota.
The government will use 300 billion renminbi, or $41.3 billion, of the ultra-long treasury bonds, to subsidize a consumer trade-in program that currently covers categories such as electronic vehicles, home appliances, household furnishing, mobile phones and more.
In 2024, China’s retail sales of consumer goods expanded by 3.5 percent; one percentage point was boosted by last year’s trade-in stimulus package, China’s Vice-Minister of Commerce Sheng Qiuping unveiled at a meeting this January.
With a goal to transition from an investment-led growth model to one driven by local consumption, the working report also mentioned plans to update employee annual leave systems to unleash cultural, tourism and sports-related retail opportunities. Other retail-related plans target duty-free retail and inbound tourism.
According to ANZ Research, this year’s unchanged growth target means that the authorities are confident about the domestic outlook, given the developments in the field of AI.
“The policymakers will continue to support the stabilisation of the property market. This involves implementing city-specific policies to reduce restrictive measures, and intensifying the renovation of urban villages and dilapidated housing,” ANZ Research wrote in the report.
“Additionally, greater autonomy will be granted to city governments regarding acquisition entities, prices and uses, and the scope of re-loans for affordable housing will be expanded,” the report continued.
ING believes that the mention of optimizing the vacation system — which features several long public holidays such as the Chinese New Year, the National Day Golden Week and the Labor Day Holiday — will alleviate issues of heavy congestion, price hikes, “and uneven consumption.”
“While there were no details, we believe that revamping the leave structure would be beneficial for tourism and leisure industries overall, as well as improved work-life balance,” wrote ING’s chief economist of Greater China Lynn Song in a memo.
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