Conditions for Growth

In January, the International Monetary Fund raised its forecast for China’s growth slightly to 4.6 percent in 2025 from the 4.5 percent forecast in October 2024, while the global economy is estimated to grow by 3.3 percent. Also in January, the World Bank revised China’s growth forecast to 4.5 percent in 2025 from its 4.1 percent forecast six months earlier.

“As the increasingly complex and volatile global geopolitical and trade environment has introduced significant uncertainty into China’s economic outlook, it is more challenging for China to achieve its growth target of around 5 percent this year than last,” Xue Lan, a leading expert on economic policy and dean of Schwarzman College at Tsinghua University, told NewsChina.　

Xue noted that China’s economy has shown a clear recovery across several sectors since the government deployed a package of incremental policies in September last year, which have laid a solid foundation for this year’s economic development.　

To boost the economy, the government pledged to adopt more proactive policies to increase the fiscal deficit to around 4 percent, 1 percentage point up from 2024. The deficit is set at 5.66 trillion yuan (US$780.9b), up by 1.6 trillion yuan (US$219b) from 2024.　

The government will also issue 1.3 trillion yuan (US$179.3b) ultra-long special treasury bonds, and 4.4 trillion yuan (US$604.1b) in local government special-purpose bonds, marking new records for both with an increase of 300 billion yuan (US$41.9b) and 500 billion yuan (US$68.9b) respectively. In total, new government debt will reach 11.86 trillion yuan (US$1.6t), an increase of 2.9 trillion yuan (US$400b) over 2024, indicating a notably higher level of public spending to drive growth.　

The government also vowed to adjust both the monetary aggregate and structure, including timely cuts to bank required reserve ratios and interest rates, and maintaining adequate liquidity in the market.　

The government highlighted the importance of maintaining employment stability. Regarding employment as the most important factor for people’s livelihoods, the government set a target of creating 12 million urban jobs to keep the surveyed urban unemployment rate at around 5.5 percent. China’s unemployment rate, especially among young people, has been a major public concern in recent years. According to official data, the national urban unemployment rate for those between 16-24, excluding students, reached 18.8 percent in August and 17.6 percent in September last year, mostly due to a surge of fresh graduates, before declining to 15.7 percent in December.　

In 2025, there will be 12.25 million college graduates. In addition, 30 million jobs have to be secured for rural migrant workers from former impoverished areas. This makes it a hard task to achieve the goal of creating 12 million new urban jobs and keeping the urban unemployment rate at around 5.5 percent for the year, said Wang Xiaoping, minister of Human Resources and Social Security, at a press conference on March 9.

While boosting consumption and improving people’s livelihoods have long been among China’s top priorities, the difference in this year’s two sessions is that the two objectives are increasingly connected.　

On March 16, a few days after the two sessions concluded, the Central Committee of the Communist Party of China (CPC) and the State Council, China’s cabinet, launched an action plan to boost consumption. It includes 30 measures across eight areas, many of which are related to improving public services such as education, healthcare, childcare and eldercare.　

It pledges to promote “reasonable growth” in wages and establish a sound mechanism for adjusting minimum salaries. It will push to extend social insurance to gig workers, such as delivery drivers and ride-hailing drivers. Days before the two sessions in late February, both e-commerce giant JD and lifestyle services platforms Meituan and Ele.me announced they will offer social security benefits to full-time riders. This includes endowment insurance, medical insurance, unemployment insurance, work-related injury insurance and maternity insurance.　

According to Meituan, the move was guided by the Ministry of Human Resources and Social Security, indicating that the government has taken a more active role in pushing for better protection of gig workers.　

The consumption-boosting plan also includes proposals to bring in childcare subsidies, which echoes the pledges made in the government work report delivered during the NPC session to offer childcare subsidies and free preschool education. Other measures include increasing pension payments, improving eldercare, developing the silver economy and promoting new consumption opportunities such as cultural tourism, inbound tourism and snow and ice tourism.　

“By connecting consumer spending to broader social goals like eldercare improvement, childcare support and work-life balance, the plan embeds consumption growth within China’s wider development objectives, signaling that consumption is being positioned not just as an economic target but as a means to enhance quality of life,” the Xinhua News Agency reported on March 16.　

“While China has taken significant measures in recent years to stimulate consumer spending, such as trade-in programs [for appliances], which have shown notable successes, there are gaps in key sectors, particularly in services like education, healthcare and eldercare,” Professor Xue told NewsChina.　

In education, there is a stark mismatch between supply and demand for high-quality early child education, Xue added, highlighting that there is also growing demand in areas such as care for disabled seniors and home-based eldercare as well.

Advancing new quality productive forces – which emphasize high-tech, efficiency and quality while moving beyond traditional economic growth models – remains a key task in 2025.　

According to the government work report, China will employ a “new system for mobilizing resources nationwide” to push breakthroughs in core technologies. It also pledges to allocate “a greater share of science and technology expenditure” to basic research.　

According to Xue, the subtle shifts in rhetoric adopted in this year’s government work report regarding science and technology innovation policies indicate that as rising external pressures pose greater challenges in addressing bottlenecks in key technologies, China has renewed its emphasis on harnessing the strengths of its system to consolidate resources and overcome these constraints.　

“The Chinese government also recognizes that breakthroughs in fundamental research from ‘zero to one’ cannot be achieved in the short term,” Xue said, “As a result, the central government will place more emphasis on ensuring that major scientific and technological projects serve the strategic needs of the country.”　

Another major change in the rhetoric on research and development in the government work report is that it pledges to “fully leverage the pacesetting role of leading high-tech enterprises to bolster enterprise-led collaboration between industries, universities and research institutes,” and to “provide institutional support for enterprises to participate in national decision-making on scientific and technological innovation and undertake major science and technology projects.”　

According to Xue, this represents a significant shift in the decision-making approach to national technological innovation. “In the past, major national scientific and technological projects were primarily led by national research institutions and universities. But as many bottlenecks are arising in the process of industrial development and practical application, it is becoming increasingly difficult for national entities to solve these problems alone,” Xue said. “Now, it is necessary for enterprises to play a leading role in national technological innovation.　

Xue noted while emphasizing the “leading role of technological backbone enterprises,” the report makes no distinction between State-owned enterprises and private enterprises, with more focus on the enterprise’s own strength and leading position. This is a clear signal and a major shift, which is also in line with the central government’s support for private enterprises.　

On February 17, Chinese President Xi Jinping held a high-level symposium for private enterprises for the first time in seven years. President Xi met with dozens of representatives of private enterprises, the majority of whom were from technology companies, including telecommunication giant Huawei, battery manufacturer CATL, AI firm DeepSeek, and smartphone and electric vehicle manufacturer Xiaomi. Analysts believe that it indicates China is placing renewed emphasis on the development of private tech enterprises.　

During the symposium, Xi said that the government is “unwavering” in its efforts to consolidate and develop both the public sector and the non-public sector economies. This was reiterated in the government work report.

In the past couple of months, Chinese stocks, especially tech firms, have become a hot prospect for many foreign investors. Fueled by the boom in China’s tech companies, the Hong Kong Tech Index surged by 36 percent in the past three months as of March 20.　

Chinese tech firms have been given various nicknames, such as “Six Little Dragons,” referring to DeepSeek, Unitree Robotics, DEEP Robotics, BrainCo, Game Science and Manycore Tech, and the “Terrific Ten,” referring to the more established firms of Alibaba, Tencent, Meituan, Xiaomi, BYD, JD.com, NetEase, Baidu, Geely and SMIC.　

In February, several leading international financial institutions, including Goldman Sachs, Morgan Stanley and Deutsche Bank, expressed bullish views on Chinese tech shares, citing their AI advances.　

On February 25, China’s Ministry of Commerce and the National Development and Reform Commission (NDRC), the country’s top economic planner, released an action plan to stabilize foreign investment that includes 20 measures.　

According to a report released by the American Chamber of Commerce (AmCham) in South China on February 26, 76 percent of the 316 foreign companies AmCham surveyed said they intend to reinvest in China, with a notable 74 percent of the US companies planning reinvestments, up 11 percentage points year-on-year.　

On March 16, officials from the NDRC and the Commerce Ministry arranged a special meeting with representatives from international companies, including Tesla, AstraZeneca and SoftBank, along with a diverse array of industries such as finance and investment, biopharmaceuticals, automotive manufacturing and tourism.　

During the meeting, Jiang Yi, director of the policy research office of the NDRC, said that China will soon release the 2025 version of the catalogue of industries that encourage foreign investment, which will include new sectors such as advanced manufacturing, modern services, high-tech industries and environmental protection.　

Stressing that China’s development journey has been “extraordinary” in the past year, showing strong resilience and vitality in the economic sector, Jiang said that China’s commitment to “deepening reform and expanding high-standard opening up remains unchanged and will not change.”　

For many analysts, this year’s two sessions has inspired greater confidence in China’s economic prospects. “Generally speaking, China’s economy has demonstrated strong resilience and shown notable advantages across various sectors,” Xue said. “With strong macroeconomic policy support, we should remain confident in China’s economic development this year.”