Provincial work reports ahead of the Two Sessions suggest that China will likely maintain its GDP growth target around 5% for 2025. Analysts predict this cautious yet realistic target reflects China's ongoing efforts to boost domestic consumption and AI development despite external pressures like US tariffs.
Ahead of the Two Sessions - China ’s most important political event of the year - provincial work reports reveal insights into the country’s economic priorities. Analysts and financial institutions predict that China ’s 2025 gross domestic product ( GDP ) growth target will likely stay “around 5 per cent”, based on economic goals set by all 31 mainland provinces, municipalities, and autonomous regions.
Observers also anticipate China unveiling more policy actions to boost domestic consumption and advance artificial intelligence (AI) to achieve the national growth target, as highlighted in provincial work reports. The keenly watched growth target of the world’s second-largest economy will be unveiled in the Chinese premier’s work report at the National People’s Congress (NPC) opening on Wednesday, March 5th, held as part of the annual Two Sessions. Known as lianghui in Chinese, the concurrent meetings of the NPC, China’s legislature, and the Chinese People's Political Consultative Conference, the country’s top political advisory body, form the country’s most important political event of the year. Ahead of the NPC opening, President Xi Jinping chaired a Politburo meeting on February 28th to discuss the government work report. That same day, state media agency Xinhua published Xi’s remarks expressing confidence in the economy, despite mounting external threats and domestic challenges. CNA analyzed work reports from the 31 local governments and found that most are aiming for GDP growth between 5.0 and 5.5 per cent, with a weighted average of 5.3 per cent - slightly below the 5.4 per cent for 2024. ‘The sum of the parts of provincial targets should still be sufficient to reach an ‘around 5 per cent’ target, and policymakers may choose to repeat the target in a show of confidence,’ said Lynn Song, ING’s chief economist for Greater China. Analysts describe the potential target of around 5 per cent as realistic yet cautious and one that still signals China’s confidence in propping up its economy amid a challenging landscape. A reading of the provincial government work reports released earlier this year hints at a cautious outlook. All provinces - except Tianjin which raised its target - have maintained or slightly lowered their GDP growth forecasts. ‘This is a more realistic approach in setting expectations,’ observed Dr Lizzi C Lee, a fellow on Chinese economy at the Asia Society Policy Institute's (ASPI) Center for China Analysis (CCA). In a report released in late January, Nanjing-based Huatai Securities said that in recent years, the GDP growth target set at the Two Sessions has ‘typically been 0.3 to 0.8 percentage points lower than the weighted average of various provinces’, which is 5.3 per cent. China Galaxy Securities echoed this prediction, noting that Beijing, Shanghai, Guangdong and Jiangsu - all of which have set GDP growth targets of around 5 per cent - have historically aligned their targets with the national level. Economic powerhouses such as Guangdong, Jiangsu and Shandong will play a critical role in driving China’s growth, according to Guotaijunan Securities in a report released in late January. Assoc Prof Alfred Wu from the Lee Kuan Yew School of Public Policy (LKYSPP), highlighted that similar targets set across provinces reflect a top-down approach. ‘All local leaders now know the taste of central government, so they will not actually take any risk,’ he added, noting that the'deviation is much smaller' in statistical terms. Meanwhile, China’s highly centralised system enables it to achieve around 5 per cent GDP growth ‘if there is political will to do so’, said Dr Lim Tai Wei, a professor at Japan’s Soka University. Last year, China’s economy grew by 3 per cent, down from 5.2 per cent in 2023. This year, its economy faces a raft of external and internal pressures. The US has imposed additional tariffs on Chinese goods - effective March 4th - on top of the 10 per cent already levied on February 4th, bringing total additional tariffs to 20 per cent. ‘It makes sense to hope for the best but prepare for the worst, so it would be good to set into motion policies that can help support domestic demand in the scenario where external demand weakens thanks to more trade protectionism abroad.’ ‘They are realistic about exports. So now, the only option is to boost domestic consumption,’ he added. China Galaxy Securities noted in its report how among the 31 provinces, 16 have explicitly listed promoting consumption or leveraging consumption as a key measure to expand domestic demand in their annual priority tasks
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