The National People's Congress commenced its annual session on Wednesday, setting the stage for a crucial week in China's economic policy landscape. The meeting, expected to conclude on March 11, will feature press conferences by the foreign minister and key economic department heads. In a significant move, Beijing revised its annual consumer price inflation target to around 2%, the lowest in over twenty years, down from the previous benchmark of 3% or higher. Meanwhile, China has added ten U.S. companies to an unreliable entities list, potentially limiting their business operations within the country.
The strained trade relationship between China and the United States continues to escalate, with the U.S. imposing fresh tariffs on Chinese goods—a 20% hike in duties over a month. This development threatens to affect China's exports negatively, a sector that remains a rare highlight in an otherwise sluggish domestic economy. The Chinese government has responded by raising its budget deficit target to 4% of GDP, marking the highest level since records began in 2010.
China has set an ambitious GDP growth target of around 5% for 2025. As part of this economic vision, a government report outlined plans to issue ultra long-term special treasury bonds worth 1.3 trillion yuan by 2025. These measures are aimed at stimulating an economy that has seen retail sales growth plummet to 3.4% from 7.1% in 2023. The real estate sector, once a pillar of economic strength, witnessed a 10.6% drop in investments last year compared to the previous year.
Consumer prices have shown minimal growth, climbing just 0.2% in both 2024 and 2023, while producer prices have been on a declining trajectory for over two years. These figures reflect the broader challenges facing China's economy as it grapples with both internal and external pressures.
Lou Qinjian, a prominent figure at the congress, addressed these issues with a call for diplomacy and dialogue with the United States.
"We hope to work with the U.S. side to address each other's concerns through dialogue and consultation on the basis of mutual respect, equality, reciprocity, and mutual betterment." – Lou Qinjian
Despite expressing a willingness for negotiations, Lou Qinjian emphasized China's firm stance on defending its national interests.
"At the same time, we never accept any act of pressuring or threatening, and will firmly defend our sovereignty, security, and development interests." – Lou Qinjian
In addition to economic concerns, the congress also touched on the growing influence of artificial intelligence technologies.
"There is no denying that AI technologies are accompanied by some unknown risks and challenges and will bring new tasks in areas like security, social governance, morality, and ethics…. It will inevitably have an impact on production," – Lou Qinjian
Lou also highlighted China's opposition to the politicization of economic and technological issues amid global security concerns.
"China… is opposed to over-stretching the concept of national security or politicizing economic and technological issues," – Lou Qinjian