Note that China is now hoping to maintain “no less than 5% growth” for the year. This pledge was further underscored by its Politburo at the opening session of China’s National People’s Congress (NPC) in Beijing on March 5, 2025. Chinese President Xi Jinping is personally hosting the meeting. It provided high-level policy guidance to deepen the economic base while navigating against worsening trade friction with the United States.
In an attempt to address the growing economic headwinds, China increased its deficit target to 4% of GDP. National Development and Reform Commission (NDRC) Finance Minister Lan Fo’an underlined that this policy gives the central government more leeway to maneuver on fiscal policy. As mentioned above, the deficit increase is used to fund several initiatives and jumpstart the economy.
Chinese authorities have specifically called for “multiple measures to help businesses in difficulty,” as they seek to mitigate the adverse effects of tariffs imposed by the U.S. The government commits to doing more deep-dive sector research. Doing so would support them understanding the needs that those sectors are dealing with and be better able to provide specialized support.
Local governments and big SOEs in China have already gotten started on plans to reroute those exports into the Chinese domestic market. This change was made at a time when most exporters are struggling because of increased trade pressures from the U.S. Major Wall Street banks have responded by cutting their GDP forecasts for China, reflecting concerns over the potential economic fallout.
Zong Liang, chief researcher at the Bank of China, said this indicated that policymakers are sticking to their initial line this year. He was clear that there is ample space for nimble, more targeted action. He stated, “It seems Beijing is not in a rush to launch a large stimulus at this stage,” indicating a cautious approach to economic intervention.
Yet the Politburo’s answer to the challenges of today has received a tepid reception at home and abroad, especially in financial markets. The CSI 300 index briefly turned lower, while Hong Kong’s Hang Seng Index trimmed gains after the announcement of the meeting’s statement. It lacks specific and impactful regulations. Analysts largely agree the proposed measures will not result in significant improvements. Though imperfect, they can provide policymakers with important tools to address outside unknowns.
Bruce Pang, an adjunct associate professor at CUHK Business School, remarked on the significance of these measures: “While they may not offer many unexpected and groundbreaking surprises, these measures equip policymakers with tools to navigate external uncertainties.”
Externally, China faces increasing pressures—in particular, their ongoing trade war with the United States. Yet despite these challenges, the territory is nothing if not determined to protect its fledgling domestic economy. President Trump recently acknowledged ongoing meetings between U.S. and Chinese representatives but did not disclose specific details about the individuals involved.
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