China Sets 2025 Economic Growth Target at Approximately 5%
Beijing Maintains Growth Projection While Increasing Fiscal Spending
Easy Trading Tips -China has retained its economic growth target for 2025 at approximately 5%, demonstrating confidence in economic stability while ramping up fiscal efforts to counter deflationary risks and mitigate the effects of escalating U.S. trade tariffs.
A government report prepared for the National People’s Congress (NPC) revealed that China is setting a budget deficit target of 4% of its gross domestic product (GDP) for 2025, an increase from 3% in 2024.
Expert Insights on China’s Economic Strategy
Charu Chanana, Chief Investment Strategist, Saxo, Singapore
“The GDP growth, inflation, and fiscal spending targets were largely in line with expectations. China seems cautious about immediate excessive spending, likely conserving resources to address potential external threats later in the year. The inflation target of 2% is ambitious, shifting from last year’s cap of ‘no more than 3%’ intended to curb overheating.
“The focus remains on boosting consumption and reducing deflation risks, increasing the likelihood of further stimulus measures. However, more clarity on artificial intelligence (AI) investment plans is needed to strengthen market confidence.”
Lynn Song, Chief Economist for Greater China, ING, Hong Kong
“China’s economic targets aligned closely with our projections. The decision to retain a 5% growth target signals policymakers’ commitment to achieving this goal. Historically, China has demonstrated a strong track record of meeting its growth objectives.
“Maintaining the same target despite external economic challenges reflects confidence and suggests increased policy support for domestic demand. We anticipate policy adjustments in the next one to two months, likely starting with monetary easing, including a potential rate cut and reserve requirement ratio (RRR) reduction in March or April.”
Tommy Xie, Head of Asia Macro Research, OCBC, Singapore
“As expected, China set its 2025 GDP growth target at around 5% and raised its fiscal deficit target to 4%.
“One key shift was the reduction of the inflation target from 3% to 2%, highlighting a pragmatic response to persistent low inflation. This shift signals a transition from ‘inflation prevention’ to a more recovery-oriented strategy. A lower consumer price index (CPI) target provides greater monetary policy flexibility, allowing room for further stimulus if needed.”
Alex Loo, FX and Macro Strategist, TD Securities, Singapore
“China’s 5% GDP growth target remains ambitious, considering domestic economic challenges and global trade uncertainties. The official budget deficit, set at 4% of GDP, was widely expected following earlier signals from the Ministry of Finance.
“China’s steady, incremental fiscal approach means investors may wait for further policy support announcements before making significant moves in the market.”
Tianchen Xu, Senior Economist, Economist Intelligence Unit, Beijing
“There’s a moderate boost to consumption. The government’s decision to double consumer subsidies to 300 billion yuan will positively impact retail sales, especially for durable goods.
“While income growth from pension and social security enhancements appears modest, the introduction of child-rearing subsidies is a notable step forward.”
Huang Xuefeng, Research Director, Anfang Private Fund, Shanghai
“The government’s work report met market expectations. This suggests that China’s stock market rally since January may be cooling as investors shift focus back to fundamentals. This trend benefits the bond market as analysts await February’s economic data for a clearer picture.”
Ding Liang, Economist and Strategist, Macro Hive, Shanghai
“Economic policy priorities have shifted slightly, with an increased emphasis on boosting consumption and improving investment efficiency. Last year’s priority of fostering high-quality productive forces has been moved down the list.”
Zhang Zhiwei, Chief Economist, Pinpoint Asset Management, Hong Kong
“The government’s report aligns with market expectations. Keeping the growth target at 5% and raising the fiscal deficit to 4% underscores efforts to stimulate domestic demand.
“The lower inflation target of 2% does not mark a significant policy shift, as it serves more as an indicator than a hard requirement. The report’s mention of potential RRR and policy interest rate cuts confirms that monetary easing will continue when conditions are deemed appropriate.”
Larry Hu, Chief China Economist, Macquarie, Hong Kong
“These policies suggest that China will counter trade tariffs with targeted stimulus.
“However, major policy actions are unlikely in March. Policymakers will take time to assess the trade war’s impact before implementing significant stimulus. Their track record shows they prioritize meeting GDP targets but avoid excessive intervention unless necessary.”
Andrew Xia, Chief Economist, Shangshan Capital Group, Hong Kong
“The biggest shift is the reduction of the CPI target to 2% from last year’s 3%, reflecting weak consumption.
“This is not necessarily a negative development. The government is strategically pursuing a ‘disinflationary boom’—balancing economic expansion while keeping inflation low. Given China’s large trade surplus, further expanding it is not a viable strategy. The focus must shift to strengthening domestic demand.”
Yuan Tao, Chief Economist, Oriental Futures, Shanghai
“There are no major surprises in the fiscal strategy. The deficit ratio and debt issuance plans are relatively moderate, even amidst ongoing trade tensions.
“It’s somewhat unexpected that the deficit ratio wasn’t set higher, given the current economic climate.”
Conclusion
China’s decision to maintain a 5% growth target, increase fiscal spending, and lower inflation goals demonstrates a strategic approach to economic stability. While cautious about excessive immediate stimulus, policymakers are signaling readiness to support domestic demand through targeted measures. Market participants will be closely watching upcoming policy announcements to gauge China’s next economic moves.