The National Committee of the Chinese People’s Political Consultative Conference (CPPCC) convened in Beijing on Tuesday, followed by the National People’s Congress (NPC) on Wednesday. Every March, China’s annual two sessions attract widespread coverage from both domestic and international media. Thanks to the complex and treacherous global landscape characterized by raging geopolitical rivalries, this year’s two sessions have drawn even greater attention. This is only natural as the two sessions are seen as the most reliable barometer for China’s economy, with details coming out of the meetings on the following fronts bearing the utmost significance.
Policy direction
Premier Li Qiang’s Government Work Report, delivered on Wednesday, was a highlight of this year’s two sessions. Its significance lies in two key aspects: First, it sets critical economic indicators such as the annual GDP growth target, fiscal policy and monetary policy, providing guidance to economic work for the whole year; second, it gives signals on policy adjustments that will directly influence market expectations, regional development, and enterprises’ decision-making on operations.
Aside from setting a GDP growth target of around 5 percent for this year, the Government Work Report’s discussion on unleashing the country’s economic potential touched on structural adjustments across primary, secondary and tertiary industries, involving policy initiatives and measures on investment, consumption and exports, as well as balancing regional economic growth. These policy initiatives are conceivably the focus of domestic attention.
As the world’s second-largest economy, China’s economy grew to $18.94 trillion in 2024, contributing 30 percent of global economic growth. And being the primary trading partner for 150 countries, China’s pace of economic growth significantly affects growth trajectories worldwide; therefore, the discussion on GDP growth targets and relevant policy initiatives have naturally attracted global attention as well.
To the relief of many, the 5 percent growth target announced in the Government Work Report is in line with market expectations and unchanged from last year’s actual growth rate, signaling that the Chinese economy has stabilized and is on course to revitalize — to the disappointment of the China doomsayers.
Reform measures
To achieve the growth target for 2025 and other economic parameters, reforms were also announced in this year’s Government Work Report. Three areas warrant close attention in this regard:
Building a high-standard market system: The third plenary session of the 20th Communist Party of China Central Committee, held in July last year, emphasized that accelerating the development of a high-standard market system through reform is a major task for the country. Major measures are to be introduced on improving or optimizing property-rights protections, information disclosures, market access, bankruptcy exit mechanisms, and credit supervision. Relevant to this is the premier’s pledge to better support the private economy and bolster business confidence by strengthening legal protections and policy support for private enterprises, ensuring their legitimate rights, especially by curbing profit-motivated law enforcement against private companies. This is of utmost significance to boosting confidence in the Chinese economy, given that the private sector is a key driving force behind China’s economic ascent over the past decades, contributing more than 60 percent of GDP, 70 percent of technological innovation, and 80 percent of urban employment, according to official figures.
Developing new quality productive forces: The third plenary session also called for the establishment of institutional mechanisms that are tailored to foster new quality productive forces. This entails upgrading traditional industries, refining policies for strategic emerging industries, and establishing mechanisms to boost investment in future industries, as suggested in Li’s Government Work Report, which pledges to nurture new quality productive forces, foster emerging and future industries, and combine digital technologies — including artificial intelligence — with the country’s strengths in manufacturing and market scale.
If the premier’s assertion that “there are no difficulties that our country cannot overcome in its development” sounds reassuring to people who care about China, more so does his pledge to adopt a combination of policy initiatives to boost consumption, stabilize the property and stock markets, promote innovation and technology, support the private sector, facilitate coordinated regional development, among others
Building an integrated system of education, science and talent: The third plenary session also highlighted the need to enhance the national innovation system through coordinated and comprehensive reforms in education, science, and talent development to maximize overall efficiency.
Li proposed in his report that the country will strengthen the strategy of realizing national rejuvenation through stronger science and education — in other words, developing a more effective national innovation system. To this end, the development of a high-quality education system will be accelerated; self-reliance in high-level science and technology will be promoted; and both the quality and quantity of the national talent pool will be enhanced.
These structural reforms aim to reshape China’s economic structure to create the conditions necessary for promoting high-quality development in the country, and thus strengthen its global competitiveness in the future.
Changes to be made to China’s economic policy are also expected to draw wide attention. The Central Economic Work Conference, held in December, made clear the overall tone of “seeking progress while maintaining stability”, as well as the intention to pursue a “more proactive fiscal policy” and “an appropriately accommodative monetary policy”. The policy adjustments covered in the Government Work Report were made in accordance with these guiding principles. For instance, it has set a deficit ratio of around 4 percent, up 1 percentage point from last year, with the deficit capped at 5.66 trillion yuan ($779 billion), or 1.6 trillion yuan higher than last year’s; the government’s overall budget expenditure for this year will be raised to 29.7 trillion yuan, an increase of 1.2 trillion yuan over the previous year. As the “more proactive fiscal policy” and the “appropriately accommodative monetary policy” kick in, stimulating domestic consumption, promoting innovation and technology development and boosting overall economic activity, new momentum will be injected into the economy, strengthening its vitality, for sure.
Economic stimulation
Three key reports to be deliberated at the two sessions serve as critical barometers for economic policy and economic prospects: the Government Work Report, the Report on China’s national economic, social development plan by the National Development and Reform Commission, and the Central and Local Budgets for 2025 by the Ministry of Finance. This year’s reports are expected to pay greater attention to the current economic foci, including boosting government investments, expanding domestic demand, and stabilizing real estate and stock markets, which are believed to be crucial to the revitalization of China’s economy in the face of a challenging external environment.
These areas are among the current market concerns. These three reports provide hints on a target-oriented comprehensive policy framework spanning macroeconomic, mesoeconomic, and microeconomic levels.
Long-term planning
China will implement its 15th Five-Year Plan (2026-30) next year. As 2025 marks the final year of the 14th Five-Year Plan (2021-25), it is imperative that this year’s Government Work Report aligns past strategies with future ones. Two policy areas stand out in this regard:
Promote future industry development: New policy initiatives are proposed in the Government Work Report to further promote the development of “artificial intelligence+”, smart manufacturing, robotics, and renewable energy — areas that have grown rapidly in recent years and are vital to enhancing economic development and competitiveness.
Boost coordinated regional development: The Central Economic Work Conference, held in December, identified nine priorities for the central government’s economic work in 2025, one of which is to boost coordinated regional development with more strategies. In 2024, the Beijing-Tianjin-Hebei region, Guangdong-Hong Kong-Macao Greater Bay Area, and Yangtze River Delta contributed over 40 percent of national economic growth. This shows that coordinated regional development is imperative for the country to achieve balanced development among regions and thus expand its overall economic pie and enhance domestic consumption. This will be realized by promoting a new type of urbanization, strengthening region-specific strategies, and furthering the development of the marine economy, among others. If the premier’s assertion that “there are no difficulties that our country cannot overcome in its development” sounds reassuring to people who care about China, more so does his pledge to adopt a combination of policy initiatives to boost consumption, stabilize the property and stock markets, promote innovation and technology, support the private sector, facilitate coordinated regional development, among others.
The author is vice-chairman of the Committee on Liaison with Hong Kong, Macao, Taiwan and Overseas Chinese of the National Committee of the Chinese People’s Political Consultative Conference, and chairman of the Hong Kong New Era Development Thinktank.
The views do not necessarily reflect those of China Daily.
