Beijing (AFP) – China is pushing for economic growth of “around five percent” in 2025, an official document seen by AFP on Wednesday showed, an ambitious goal as Beijing faces down an intensifying trade war with the United States and deepening economic doldrums at home. The goal came with China already buffeted by strong economic headwinds, including a persistent property sector debt crisis, stubbornly low consumer demand, and stuttering employment for young people. It is also broadly in line with an AFP survey of analysts ahead of its official announcement later in the morning by Chinese Premier Li Qiang in the opening speech of the country’s rubber-stamp National People’s Congress (NPC) parliament. Experts say that figure is ambitious considering the economic challenges facing the country. It came alongside a pledge to create 12 million new jobs in China’s cities and push for two percent inflation in 2025.
Thousands of delegates will congregate in the morning for the opening session of the NPC, the second of China’s “Two Sessions” meetings this week. The world’s second-largest economy has struggled to regain its footing since the pandemic, as domestic consumption flags and a persistent debt crisis in the vast property sector drags on. Adding to the hurdles is US President Donald Trump, who this week slapped more blanket tariffs on Chinese imports following a similar move last month. US tariffs are expected to hit hundreds of billions of dollars in total trade between the world’s two largest economies. “Internationally, changes unseen in a century are unfolding across the world at a faster pace,” the government work report said. “Unilateralism and protectionism are on the rise,” it warned. And “domestically, the foundation for China’s sustained economic recovery and growth is not strong enough,” it added.
– Fight to the ‘bitter end’ –
Chinese exports reached record levels last year. But a broadening trade war under Trump would mean that the country will now need to rely on other drivers of economic activity. Beijing on Tuesday announced its own measures in retaliation for Washington’s latest tariff hike — and vowed it would fight a trade war to the “bitter end.” The moves will see China impose levies of up to 15 percent on a range of US agricultural products including soybeans, pork, and wheat starting from early next week. Beijing’s countermeasures represent a “relatively muted response” in comparison to Trump’s all-encompassing tariffs, wrote Lynn Song, chief economist for Greater China at ING. “The retaliation could have been a lot stronger, and with every further escalation the risks are also rising for a stronger response,” he added.
– More help needed –
Analysts say authorities may announce plans this week to boost the economy — adding to a string of aggressive support measures announced late last year. Experts warn that the existing measures don’t go far enough in providing the stimulus that could right China’s wobbly economy. “Guidance from Beijing notes that the fiscal deficit will increase substantially this year,” Harry Murphy Cruise, head of China and Australia economics at Moody’s Analytics, told AFP. “We expect an official fiscal deficit of four percent of GDP (up from three percent) and record high issuance of special government bonds,” he said.
Wednesday’s proceedings are also expected to see the government release information on its planned defense spending in 2025. Geopolitical competition between Beijing and Washington is set to intensify this year, analysts say. The status of self-governed Taiwan — claimed by China as part of its sovereign territory — is chief among the sources of tension. That spending will finance Beijing’s frequent dispatch of military aircraft around Taiwan, intended to put pressure on authorities in the democratic island. It also comes after Trump proposed a coordinated halving to the military budgets of the United States, Russia, and China. China has not agreed to such a move, with a foreign ministry spokesperson suggesting last month that any reductions in military expenditure should be conducted by Washington first.
© 2024 AFP
