China's 5% GDP Target: A Balancing Act Amidst Global Uncertainties

As the world's second-largest economy, China has set an ambitious yet achievable GDP growth target of around 5% for 2025, despite facing headwinds from US tariffs and global uncertainties. This target, unveiled in the Government Work Report, reflects the government's commitment to maintaining stable economic growth, employment, and prices amidst challenging external conditions.



To achieve this growth target, China plans to implement a more proactive fiscal policy and a moderately loose monetary policy. The country aims to increase its fiscal deficit ratio to around 4% of GDP, the highest level in over three decades, to provide more fiscal support for high-tech industries and strategic emerging industries. Additionally, China will expand the issuance of ultra-long special treasury bonds and local government special-purpose bonds, as well as optimize the structure of fiscal expenditure.

On the monetary front, China will adopt a moderately loose monetary policy, ending the "prudent" stance maintained for 14 years. This will involve timely reserve requirement ratio (RRR) cuts and interest rate reductions to maintain ample liquidity, lower the comprehensive financing costs for the real economy, stimulate market demand and vitality, expand domestic demand, and promote household consumption.

To balance its focus on high-quality economic development with the need to maintain growth momentum, China will prioritize scientific and technological innovation, forward-thinking arrangements for major technological projects, large-scale demonstrations for applying new technologies, and boosting China's strategic scientific and technological strength. This will help the country build a modernized industrial system and drive the development of new quality productive forces.



Moreover, China will strive to maintain steady economic growth, keep employment and prices generally stable, and ensure a basic equilibrium in the balance of payments. The country will also adopt a more proactive fiscal policy, set a higher deficit-to-GDP ratio, and ensure its fiscal policy remains consistently forceful and impactful.

In conclusion, China's 5% GDP growth target for 2025 is a testament to the country's commitment to maintaining stable economic growth amidst global uncertainties. By implementing a more proactive fiscal policy, a moderately loose monetary policy, and prioritizing technological innovation, China aims to balance its focus on high-quality economic development with the need to maintain growth momentum. As the world's second-largest economy, China's success in achieving this target will have significant implications for the global economy.