China targets around 5 per cent growth in 2025 as trade war with US simmers

BEIJING – China is pushing to expand its economy by an ambitious 5 per cent in 2025 in a show of confidence, unlocking more fiscal firepower to do so as its trade war with the United States escalates.

The headline target, listed in an annual work report delivered by Premier Li Qiang at the opening of China’s legislature on March 5, was broadly in line with economists’ expectations and unchanged from the last two years.

Still, it is higher than what analysts currently believe China can achieve, given the deteriorating trade environment and continuing domestic problems.

The World Bank has projected that China’s economy will expand 4.5 per cent in 2025, while the International Monetary Fund’s forecast is 4.6 per cent.

Crucially, additional tariffs that the US has been ratcheting up since the start of the year – now at 20 per cent – threaten to hobble the exports that had helped China to achieve 5 per cent growth in 2024 amid a slowing economy.

In his report, Mr Li pointed to a “severe external environment” and a rise in protectionism and tariff barriers globally that could impact China in trade and technology.

The foundation for China’s sustained economic recovery and growth is also “not strong enough” domestically, he said, citing sluggish consumption, job market pressures and fiscal difficulties faced by local governments.

As for the US levies, they could knock 1 percentage point off China’s growth, according to an estimate by Dr Larry Hu, chief China economist at financial services firm Macquarie Group.

Still, China has opted not to moderate its growth target, a move that some analysts say is a show of confidence.

“Leaders probably don’t want to give the impression of being weak in the economy, especially faced with (US President Donald) Trump’s pressures,” said Mr Xu