BEIJING – China’s major annual political gathering kicks off on March 4, with all eyes on plans to reinvigorate its faltering economy in the face of domestic headwinds and an escalating trade war with the US.
Thousands of delegates from all over the country are gathering in Beijing to attend the Lianghui or Two Sessions – parallel sets of annual meetings of the National People’s Congress (NPC), or Parliament, and of the Chinese People’s Political Consultative Conference (CPPCC), a top advisory body of experts, business leaders, celebrities and representatives from political parties other than the ruling Communist Party of China.
The Two Sessions typically lasts about a week, with the CPPCC meetings starting on March 4 and the NPC ones the day after.
When the NPC meetings open on the morning of March 5, most economists expect Premier Li Qiang to announce a 2025 growth target of around 5 per cent – which would be similar to the target set for the past two years.
Mr Li will deliver the government work report, which consists of a recap and evaluation of efforts made in 2024 and a blueprint for the priority areas in the coming year.
The Chinese government is also expected to announce a larger fiscal deficit in 2025 of about 4 per cent of gross domestic product, compared with 3 per cent the year before, in order to fund measures such as those designed to boost household consumption.
UBS chief China economist Tao Wang said in a note that the government is likely to prioritise “stabilising growth” as the central task in 2025 and to boost domestic demand with more supportive macro policies.
With inflation barely growing in 2023 and 2024, many economists expect Beijing to revise down its ceiling for inflation, measured by the consumer price index, to 2 per cent from 3 per cent in 2024.
Macquarie’s chief economist Larry Hu said this would mark a “meaningful shift” as deflationary pressures continue – policymakers had been reluctant to lower the 3 per cent target for many years despite the economy having fallen short of it.
While the Two Sessions is typically a domestic affair, an external factor looms particularly large over the proceedings this year – the economic and geopolitical rivalry with the US that has heightened after US President Donald Trump took office in January.
An additional 10 per cent tariff on Chinese goods will kick in on March 4, coinciding with the opening of the Two Sessions. Mr Trump has hinted at more to come.
At a CPPCC pre-opening press conference on March 3, Mr Liu Jieyi, the advisory body’s spokesman, acknowledged that the Chinese economy faces “some difficulties and challenges”, including insufficient consumption demand and unresolved risks in some areas.
He insisted the economy will continue to sail far by “chopping waves and cutting through stormy seas”.
Chinese President Xi Jinping is not scheduled to make a public speech, but he will meet some delegates at closed-door sessions.
Delegates attending the meetings will be proposing ideas to boost the development of artificial intelligence and other identified new growth areas, termed “new productive forces”.
They will also discuss ideas on how to tackle societal issues, including low rates of marriage and birth, and the ageing population.
Economists do not expect many surprises from the unveiling of the work report on March 5 because the Chinese government cannot stray from the policy priorities set by the Communist Party at its Central Economic Work Conference in December 2024, which include stimulating domestic demand and supporting the private sector.
Analysts also do not expect China to reveal all the cards it has at the moment, given that the full extent of the tariffs that the US is expected to unleash is not known yet.
“I’m not expecting a stimulus bazooka now. Beijing will want to keep its powder dry and wait until Trump announces more tariffs, likely after April, before it rolls out more stimulus to negate the impact of the tariffs,” Mr Qiu Mingda, a senior analyst with US-based consultancy firm Eurasia Group, told The Straits Times.
- Additional reporting by Lim Min Zhang
- Yew Lun Tian is a senior foreign correspondent who covers China for The Straits Times
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