As China embarks on another critical year of economic and political maneuvering, Premier Li Qiang’s latest Government Work Report lays bare the challenges and aspirations of the world’s second-largest economy.
Against the backdrop of an increasingly fragmented global landscape — compounded by a persistent trade war with the United States, shifting alliances, and mounting geopolitical uncertainty — Beijing is attempting a delicate balancing act: stimulating domestic growth, reassuring foreign investors, and fortifying its strategic position on the world stage. This balancing act is more complex than ever as the international order continues to shift, with China’s rise coinciding with global disruptions.
The central government’s 2025 GDP growth target of around 5 percent signals both pragmatism and confidence. It acknowledges the economic headwinds facing China, including demographic challenges and a deceleration in global trade, while projecting an image of resilience and purpose. This growth target is a far cry from the double-digit expansion of previous decades, reflecting a mature approach that balances ambition with caution. The target also aligns with the State’s long-term vision of maintaining stability without overextending stimulus efforts that could undermine financial sustainability or create systemic risks. However, the path forward is anything but straightforward, with risks emerging from both external pressures and internal structural adjustments.
A key pillar of China’s economic strategy this year is an expanded fiscal stimulus package. The issuance of 1.3 trillion yuan ($179 billion) in ultralong special Treasury bonds in 2025 — 300 billion yuan more than last year — aims to inject liquidity into critical sectors and sustain economic momentum, while providing targeted support to key industries facing supply chain challenges. Similarly, the decision to raise the deficit-to-GDP ratio to 4 percent reflects the government’s willingness to deploy a proactive fiscal approach that prioritizes short-term growth. Ensuring that these measures contribute to sustainable and balanced growth will be essential in fostering long-term economic strength and avoiding overreliance on debt-driven growth.
Despite rising tensions with the West, China is actively courting foreign investors. Li emphasized that Beijing remains committed to economic openness, pledging to widen access to key sectors such as telecommunications, healthcare, and education, which have traditionally been more insulated from foreign competition. The promise of a more open internet and cultural landscape also suggests an attempt to strike a balance between economic liberalization and governance priorities. Investor confidence will ultimately depend on how these commitments translate into tangible opportunities in the business environment, particularly with respect to regulatory transparency and the protection of intellectual property. The ability to create an environment in which foreign capital feels secure will determine the extent to which China can attract global talent and investment.
China’s private enterprises, long considered the engine of economic dynamism, remain central to the country’s economic ambitions. The government’s renewed commitment to protecting the rights of private businesses and fostering a conducive environment for entrepreneurship signals a recognition of their importance. Clear and consistent policies that support business innovation, fair competition, and market-driven growth will be key in sustaining long-term economic vitality. However, the government has also shown a growing inclination to prioritize State-owned enterprises in strategic sectors, which may challenge the autonomy of private firms in some areas. Striking a balance between empowering private entrepreneurs and ensuring national security will continue to be a delicate issue.
Recognizing the need to pivot toward high-tech industries, China is doubling down on artificial intelligence, smart terminals, and the internet of things. The government’s emphasis on “future industries” such as biomaterials, quantum technology, and 6G reflects a strategic vision that extends beyond immediate economic recovery. These investments position China as a leader in emerging technologies, fostering innovation while enhancing its global competitiveness. In particular, advancements in AI and quantum computing hold the potential to reshape industries worldwide, and China’s efforts in these fields are meant to establish the country as a technological superpower. These sectors are expected to receive substantial government support, ensuring that they remain key drivers of economic growth in the years to come.
For the Hong Kong and Macao special administrative regions, the central government’s message this year signals a subtle but important shift. While reiterating the principle of “one country, two systems” and the need for patriotic governance, the report introduces a new emphasis on “deepening international exchanges and cooperation”. This suggests an upgraded role for Hong Kong as a global connector — one that extends beyond finance to broader economic and cultural exchanges. Hong Kong has always been seen as a bridge between China and the rest of the world, and Beijing’s latest rhetoric reflects an understanding that the city can leverage its advantages in trade, finance, and professional services to strengthen its position in the global economy. This shift may also involve Hong Kong taking a more active role in promoting Chinese culture and soft power on the world stage.
Amid rising geopolitical tensions, China’s decision to maintain a 7.2 percent increase in military spending — consistent with previous years — signals continuity rather than escalation. While some analysts interpret this as a restrained approach, others argue that steady military expansion, particularly in the Taiwan Strait, reinforces China’s long-term strategic ambitions. At a time when global supply chains are still recalibrating, maintaining regional stability remains a key priority. Military strength remains integral to China’s broader geopolitical strategy, particularly as the country seeks to assert itself as a global power capable of safeguarding its interests. While military spending is not a dramatic increase, the steady commitment to defense spending underlines the government’s focus on ensuring its security in an increasingly unstable international environment.
Li candidly acknowledged that weak consumption remains a critical economic challenge. With urban unemployment pressures mounting, particularly among young people, the government has pledged to create over 12 million new urban jobs, alongside targeted support for fresh graduates and migrant workers. Strengthening consumer confidence and addressing the structural issues of inequality and regional disparity will be critical in ensuring sustainable growth in domestic demand. Until these challenges are addressed, China risks facing continued consumption stagnation that could hinder broader economic recovery.
China’s 2025 economic goals are not just about hitting a 5 percent growth target — they are about demonstrating resilience in the face of global volatility. The policies outlined in this year’s Government Work Report reflect a balancing act: enacting proactive fiscal measures while ensuring financial prudence; promoting economic openness while safeguarding national priorities; and having technological ambition while navigating a shifting global landscape. How effectively Beijing executes its policies in the coming months will determine the trajectory of its long-term economic evolution.
The author is chairman of the Asia MarTech Society and sits on the advisory boards of several professional organizations, including two universities.
The views do not necessarily reflect those of China Daily.
