China’s economic vision for 2025 meets Trump’s tariffs

China has set its fiscal deficit target for 2025 at a record 5.66 trillion yuan, marking the highest level in over 3 decades. This follows the government's coordinated efforts to counter rising US tariffs and declining domestic consumption. Despite multiple challenges, China has set an ambitious 5 per cent growth target for 2025.

Li Qiang, Chinese Premier, said in an address, ‘The expected economic growth target of around 5 per cent is set not only to support employment stability, risk prevention, and public well-being but also because it is backed by economic growth potential and favorable conditions.’ 

China is ramping up fiscal spending to achieve its growth target, with the government pledging significant stimulus efforts to stabilise the economy. As part of its fiscal strategy, China will issue 1.3 trillion yuan in ultra-long sovereign bonds, marking an increase from last year's 1 trillion yuan. Additionally, 300 billion yuan will find a new trade-in programme, designed to boost consumer spending on durable goods like cars and appliances. The government is also allocating money for local governments. These measures are part of a broader effort to support a troubled domestic economy.

Li Qiang highlighted the focus points for 2025. 'The main targets for development this year are projected as follows: GDP growth of around 5 per cent, surveyed urban unemployment rate of around 5.5 per cent, over 12 million new urban jobs, CPI increase of around 2 per cent,' he said.

While local government debt is estimated to be as high as 100 per cent of GDP, central borrowing has increased in recent years to manage growing debt risks at local levels. Despite concerns over long-term inflation and debt servicing, China believes borrowing and injecting more money into the economy can possibly offset rising concerns over trade turmoil.