National People’s Congress sets out 2025 targets and focal points of economic policy for China

China’s highest-level decision-making body, the National People’s Congress (NPC), assembles in Beijing each spring to set policy agendas, as well as approve budgets, major legislation and important government appointments. In practice, most matters have already been decided by the party leadership or other government agencies, so the job of NPC delegates is to give a formal stamp of approval to these decisions. The week-long session began on Wednesday (Mar. 5). In keeping with custom, premier Li Qiang opened with his government work report, a review of the past year’s achievements and an overview of the goals and areas of emphasis in the year ahead.

There were no surprises with respect to China’s 2025 economic targets. The GDP growth target is “about 5 %,” the same as last year. And like last year, hitting the GDP target will be difficult. To support economic growth, the budget deficit with be increased to around 4 %. Because off-budget activities in the public sector are significant, growth of the budget deficit does not necessarily mean that public sector spending overall will be more accommodating than last year. The inflation target was set at around 2 %, down from 3 % last year. However, the inflation target, unlike the GDP growth target, is non-binding. It functions more like a ceiling on how much prices can rise. Inflation is currently around zero, so the target does not restrict monetary policy. The government has also set the usual targets for job creation in new urban areas (12 million), urban unemployment (5.5 %), growth of household incomes (match the pace of economic growth), balance of payments (basic equilibrium), grain production (700 million metric tons), energy intensity (a drop of 3 % in energy consumption per unit of GDP) and steady improvements in the environment.

There are ten “major tasks” in the government’s 2025 programme. While many of the proposed measures represent steps in the right direction, they do little to correct the structural problems of the Chinese economy in substantial ways. Many of the measures proposed also require further clarification. The first major task calls for boosting domestic demand. Consumption with be boosted only with “special” measures such as extending the consumer goods trade-in programme, so needed long-term structural measures are not to be expected. The measures also include spurring investment demand. The second task targets development of technology and industrial modernisation. Additional funding is promised for such fields as biomanufacturing, quantum technology and 6G technology, as well as research on advanced uses of artificial intelligence (embodied AI). Moreover, application of AI in industry and devices will be supported. The third task is strengthening science education and innovation pipelines. Education improvements will extend through elementary school to university, with a view to achieving greater national self-sufficiency in science and technology. The fourth task is promoting reforms and the leveraging economic reforms by cutting red tape. Measures include harsher punishment for payment arrears, elimination of inter-regional barriers to trade and shifting the collection duties for certain excise taxes to local governments.

The fifth task is continuing the opening up of the economy and attracting foreign investment, which includes upgrading of the China-ASEAN free-trade agreement. The sixth task is prevention of systemic risks. Real estate trading restrictions, for example, will be further relaxed to support the sector, “a package of measures” will be implemented to deal with local governments debt problems, capitalisation of small and medium-sized financial institutions will be bolstered and smaller banks urged to merge, while deposit insurance and financial stability funds will be replenished. The seventh task is development of agriculture and revitalisation of rural economies. The eight task is coordination of urbanisation policies and spatial development. Measures include making it easier to move to cities by relaxing permanent residency permit rules and easing access to public services. The ninth task involves emissions reduction and accelerating the green transition. The tenth task is improving and ensuring the well-being of people to assure social stability. Unemployment insurance will be improved, and employment will be supported with measures such as employment support for companies, help for the long-term unemployed, assistance for young people in transitioning into the working life and encouraging entrepreneurship. Child support and improved pre-school and daycare services should make it easier for couples to start a family.