China Targets 5% Growth as it Reels from Trump Tariffs

China has set a challenging 5% economic growth target for this year, amidst the ongoing trade war with the US sparked by Donald Trump's tariffs. This target is the same as last year's, and Premier Li Qiang has described it as "very challenging" due to the increasingly complex external environment.¹

The trade war with the US has had a significant impact on China's economy, with exports and infrastructure spending, traditionally key drivers of growth, being affected. In response, China is looking to boost domestic consumption to restore confidence and reflate the economy.

To achieve this goal, China plans to issue 1.3 trillion yuan (approximately $182 billion) of ultra-long special treasury bonds, an increase of 300 billion yuan from last year. The country has also set its deficit-to-GDP ratio for this year at around 4%, up one percentage point from last year.

In addition to these measures, China aims to support the private economy and bolster business confidence. Premier Li Qiang has pledged to strengthen legal protections and policy support for private enterprises, ensuring their legitimate rights and curbing profit-motivated law enforcement against private companies.

The government also plans to foster emerging and future industries, such as quantum technology and the low-altitude economy, accelerate the upgrading of traditional industries, and combine digital technologies, including AI, with manufacturing and market strengths.

Foreign investment is also being encouraged, with China persisting in its opening-up policy, leading to more reforms and development opportunities. The country aims to establish a mechanism for "future industries" to support hi-tech fields, including biomaterials manufacturing, quantum technology, embodied intelligence, and 6G.

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