China Keeps Growth Target At "Around 5%" Despite Tariff Threats

(RTTNews) - China maintained its growth target for 2025 but the government became more cautious about nominal growth and inflation outlook amid heightened uncertainty surrounding the U.S trade tariff threats.

Beijing aims to achieve growth target of "around 5 percent" for 2025, which was unchanged from the 2024 goal, Premier Li Qiang said at the 14th National People's Congress on Wednesday.

Beijing lifted its budget deficit estimate to "around 4 percent" of GDP from 3 percent last year, the work report submitted to the top legislature for deliberation showed. The government aims to raise defense spending by 7.2 percent this year.

However, inflation target was lowered to "around 2 percent" from 3 percent in previous year. The new target is the lowest in more than two decades.

According to the work report, Beijing estimated the urban unemployment rate to around 5.5 percent.

The work report said the exchange rate will be kept generally stable at an adaptive, balanced level.

In 2024, China achieved its official growth target as series of stimulus measures late last year revived industrial production and spending, and exports increased ahead of potential tariff hikes by the US administration. Gross domestic product grew 5.0 percent in 2024.

Capital Economics economist Julian Evans-Pritchard said the growth target is ambitious given that the target was only narrowly met last year.

Although the government is set to deliver some increase in fiscal support, the degree of easing is more modest than it might appear, the economist noted.

"We remain sceptical that it will be sufficient to prevent growth from slowing this year, especially given the headwinds on the external front and the lack of a more pronounced shift in government spending towards support consumption," he said.