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China sets GDP target at 5% and raises budget deficit level as trade war intensifies

News RoomBy News RoomMarch 5, 2025
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China sets its GDP growth target at 5% for 2025, unchanged from the 2024/2023 runway, despite rising risks of trade tariffs. President Xi Jinping emphasized the “long-term global economic stability, sustained and healthy development, and a stable and rising standards of living” during a jointinvestment package meeting with the U.S.—referred as the “Two Sessions” in English—for the resolution of China-US trade争端. The new target widens the growth gap between developed and developing countries by points, focusing on maintaining market supply and price stability. The government work report indicates an increase in the budget deficit to 4% of GDP, the highest in three decades, to address trade tensions and inflation concerns. Central policies include stimulating demand with the issuance of special-purpose bonds to finance infrastructure investments, expanding support for AI and renewable energy projects. Premier Li Qiang expressed concern over Trump tariffs, urging the government to focus on domestic demand and create policies to support U.S. businesses. Meanwhile, Trump’s aggressive trade measures—10% tariffs on Chinese goods last month, doubling the import duties on U.S. agricultural exports, and a 15% tariff on shipping inputs—have weighed on global stock markets, pushing markets towards their most Thursday low of the week. Constraints on trade may also impact other major markets, including global stock ETFs.

China printed 4.4 trillion yuan (approximately $570 billion) in special-purpose bonds to finance infrastructure projects, with an additional 1.3 trillion yuan used to support agricultural and defense costs. The report also includes measures aimed at boosting domestic consumption, aligning with recent reductions in the domestic inflation target (from 3% to 2%). Other trillion dollar measures include provisions to support the large-scale operations of the largest commercial banks. Meanwhile, China has supported innovation with policies to invest in AI, renewable energy, and是我国 manufacturing sectors. Prime Li emphasized the importance of maintaining balance between market supply and demand, particularly amid the rise in trade tensions, and highlighted the need for the U.S. side to seek an existing baseline or reduceishment of tariffs upon withdrawal. According to a recent survey by the Chinese芯 alliance, China’s total domestic investment in 2024 was 11.5 trillion yuan, growing 12% year-over-year, as global recessions raise concerns about consumer spending.

US-China trade war has widened, as Trump |- tariffs on U.S. goods surpassed the previous year by 10%, with levels doubling this month. This has sent shockwaves through global markets, with a sharp decline in stock indices and a 2% drop in the duty rate on major input from China. However, the Chinese government has increasingly pushed back the tariffs, with the U.S. delivering 15% tariffs on U.S. agricultural imports, while China has imposing 10% import duties on the U.S. seafood industry. This has solidified China’s position as a net Hawk in global trade, with the U.S. continuing its efforts to limit US growth. The rise in U.S.-China trade debates has also had a ripple effect beyond the immediate market, as other countries on the trade wars saw their outgoing economic pressures amplified. China’s timing in responding has been met with “… sharp reaction和支持 at home” from the domestic market, but some analysts warn of delays in dealing with U.S. gravity threats. The global economy remains volatility insane, with markets reacting strongly to the US decline in oil prices, as OPEC+ plans to raise supply to caps; and amid the tensions, OSEK, the Dutch exchange rate fund, loses ground on Thursday. In China, the yuan weaken a bit against the dollar due to continued yuan-bound foreign demand. This weakened yuan may accelerate the disvaluation of commodities, which have been viewed as a buffer against US-driven depreciation. Globally, commodity prices decline as winners adjust to the losses, with gold and看电影archy outperforming others. The impact of the trade war continues to be felt, with Chinese growth faces widespread uncertainty amid fears of US dollar weakness and uncomputed trade disputes.

In summary, China’s economic shift toward stimulation measures under the “double low” (very low inflation and very low growth)KS2 framework has allowed it to compete advantageously in global markets. Yet, the rise in trade קו tensions, facilitated by US tariffs that exceed China’s previous ones, has demonstrated the deepening interdependence of the global economy. While the Chinese government has successfully countered President Trump’s “””trig-h打了”” with its robust stimulus measures, the US-China edge remains critical to avoiding a Tory-led global trade war. China’s policy responses, while defensive, have also highlighted the need for a more inclusive economic approach that affords all global participants an equal opportunity to adapt and recover. This risk emerges as the world begins to see a(gray area where sustained trade imbalances could undermine global stability and discipline.

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