China wants to “turn domestic demand into the main engine and anchor of growth,” while the shift of the private economy will be the breakthrough.
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| Chinese President Xi Jinping meets with top private business leaders, February 17. (Source: Xinhua) |
The 14th National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC) in Beijing have just concluded with many new points in priorities and policy directions, as well as development perspectives of the world's second largest economy in the 15th five-year plan.
Domestic "anchor"
2025 marks the final year of the 14th Five-Year Plan, and is also an important milestone opening the 15th Five-Year Plan of China.
At the opening session of the National People's Congress, Premier Li Qiang announced China's GDP growth target of "around 5 percent" for 2025. In his annual government work report, the Chinese premier noted that the world is witnessing "changes unseen in a century," with the world's second-largest economy laying out plans to stabilize growth by boosting domestic demand.
Economists say the 5% growth target, similar to 2024, will be challenging. China met last year’s target with a last-minute export boom – exports jumped 10.7% in December, pushing the trade surplus to a record $1 trillion.
In 2024, China achieved 5% growth, but retail sales increased by only 3.4%, down sharply from 7.1% in 2023. Meanwhile, the real estate crisis continued, with investment falling 10.6% year-on-year.
Beijing’s 5% GDP target, amid a new US-China trade war, suggests that boosting the economy through trade will be difficult. US President Donald Trump has announced a doubling of tariffs on most Chinese goods to 20%, with some tariffs as high as 45%. China quickly announced retaliatory tariffs of up to 15% on agricultural goods.
“This target is very ambitious,” said Alicia García-Herrero, chief economist for Asia-Pacific at investment bank Natixis, adding that it was “unachievable” without a larger stimulus, especially in the face of rising tariffs.
China’s challenge in 2025 will be to shield its economy from the impact of the trade war. Economists are urging policymakers to step up stimulus, especially by giving consumers more money to boost domestic demand.
In the report, Premier Li Qiang said Beijing wants to “make domestic demand the main engine and anchor of economic growth.” However, details on how to do so were scarce, except for a pledge to issue 300 billion yuan ($41.2 billion) in special treasury bonds to subsidize stimulus programs to trade in old consumer goods and home appliances.
Beijing will also increasingly focus on the need to develop high-tech and innovative industries – areas that Chinese President Xi Jinping calls “new quality productive forces”.
Speaking to nearly 3,000 delegates at the Great Hall of the People, Premier Li Qiang stressed that the government will establish a mechanism to increase funding for future industries such as artificial intelligence, 6G... and at the same time promote "new quality production forces" in areas such as electric vehicles, batteries and related products.
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| China's private sector now generates more than 50% of government revenue, more than 60% of economic output, and accounts for 70% of technological innovation. (Image created by AI) |
Private economy is a breakthrough
It is estimated that China's private sector now generates more than 50% of government revenue, more than 60% of economic output, and accounts for 70% of the economy's technological innovation.
Attending the private sector economic symposium, President Xi Jinping delivered an important speech, emphasizing the vast and promising development prospects of the private sector in the new era. He also expressed his hope that entrepreneurs will demonstrate their talents and become the driving force behind China's modernization.
In the context of economic transformation and model upgrading, private enterprises face many challenges. The Government hopes to reaffirm its support for this sector through the Congress, especially emphasizing the role of private enterprises in innovation and high technology. President Xi Jinping stressed the need to remove barriers and create a fair competitive environment for the private sector.
This is the second time in less than a month that Beijing has made a clear move with a “breakthrough” in the private economy. Previously, on February 17, at the Conference on Private Enterprises, President Xi Jinping personally met with China’s top private business leaders, emphasizing their role in reform, opening up and technological progress. Sharing about the difficulties and challenges facing the private economy, Xi Jinping admitted that “internal factors” are more important than “external issues”.
The US media commented that this congress could mark a major shift for the private sector in the world's second largest economy. President Xi Jinping affirmed that the current difficulties of this sector stem from the process of reform, development and model transformation, which are local rather than general, temporary rather than long-term.
Xi Jinping has made demands on private enterprises, emphasizing their role in promoting China-style modernization. The leader called on enterprises to stick to their core industries, develop towards high quality, improve governance, strengthen internal supervision and improve risk prevention mechanisms.
At the same time, Xi Jinping made a number of clear commitments to private sector leaders, including removing barriers to fair competition, resolving financial difficulties, supporting debt settlement, and strengthening law enforcement supervision to protect the legitimate rights and interests of businesses.
The meetings, the first since 2018, have fueled speculation that Beijing will give the private sector more freedom in the face of the US-China trade war, while supporting the private sector's breakthrough in innovation, laying the foundation for China to establish a new position in technology.
“Beijing is repositioning the private sector as a pillar of national competitiveness amid economic and geopolitical headwinds,” commented Morgan Stanley chief economist Robin Xing.
Source: https://baoquocte.vn/mui-dot-pha-2025-cua-trung-quoc-307395.html
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