The Chinese communist regime has announced its economic goals for the coming year. The announcement came at its annual top political meetings known as the “Two Sessions,” amid an ongoing tariff war with the United States.
Observers have said that the official economic targets have political meaning over and above simply reflecting China’s economic reality, especially given the impact of U.S. tariff increases on Chinese goods.
Chinese Premier Li Qiang said in his government work report at the National People’s Congress—China’s rubber stamp legislature—on March 5 that China’s gross domestic product (GDP) growth rate is set at around 5 percent for 2025. The urban surveyed unemployment rate will be around 5.5 percent, with more than 12 million new urban jobs; and the consumer price index (CPI) will increase by about 2 percent.
The “Two Sessions”—the National People’s Congress and the Chinese People’s Political Consultative Conference—started on March 4 and is expected to last for a week. The United States’ additional 10 percent tariffs on Chinese goods took effect on the same day.
The tariff was added on top of a previous 10 percent tariff increase on Chinese goods last month.
The 20 percent tariff increase is in addition to any Section 301 tariffs implemented during the first Trump administration or the Biden administration, making certain products from China subject to 45 percent tariffs in addition to normal duty rates.
In retaliation, the Chinese communist regime announced that starting March 10, up to 15 percent in additional tariffs will be imposed on some products from the United States. It added 15 U.S. entities to its export control list.
“If war is what the U.S. wants, be it a tariff war, a trade war or any other type of war, we’re ready to fight till the end,” China’s embassy to the United States posted on social media platform X on March 5.
“China’s countermeasures are limited and mostly symbolic, but its attitude is relatively tough. It shows that Beijing will not hesitate to sacrifice China’s economic development for political stability and control,” Chinese American economist Davy J. Wong said of China’s retaliation to the U.S. tariff increase.
Xu Zhen, a senior professional in China’s capital market, told The Epoch Times that the tariff war will have significant psychological impact on the Two Sessions, “making the delegates more pessimistic about China’s economic growth prospect.”
Wong told The Epoch Times that China’s export-oriented manufacturing industry is highly dependent on the U.S. market. This trade war is much more difficult for China than the one in 2018 during Trump’s first presidency, he said.
“China is currently at its worst economic situation in nearly 20 years. China’s entire economy relies on foreign trade, and its foreign trade relies on exports, mainly to the European and American markets, with the U.S. market accounting for more than 65 percent.
5 Percent GDP Growth
In terms of the regime’s 5 percent GDP growth target, Wong said that such official numbers have always been questioned, especially against the backdrop of the escalating U.S.–China trade war, the increasingly obvious withdrawal of foreign capital, the substantial shift of supply chains overseas, and the difficulties faced by domestic companies.“The 5 percent GDP growth target is more of a political propaganda that is out of touch with economic reality,” he said.
“China’s economy is said to be driven by three pillars: exports, investment, and domestic demand. Now, [it] actually relies on exports. If the export situation deteriorates, especially exports to the United States, coupled with the fact that domestic demand has been declining, it will obviously add huge pressure to setting the economic goals. It will be difficult even to maintain 4 percent GDP growth this year,” Wong explained.
U.S.-based China affairs observer Wang He told The Epoch Times that the Chinese regime’s 5 percent GDP growth target for 2025 “is a political goal to support the completion of the goals of the regime’s 14th Five-Year Plan,” from 2021 to 2025.
This year is the last year of the “14th Five-Year Plan,” he said. In order to achieve the five-year-plan’s goal, the average annual GDP growth rate must be at least between 4.6 percent and 4.8 percent. “It’s a result of data manipulation and is completely decoupled from the actual economic situation,” Wang said.
The U.S.–China trade war could escalate quickly, according to Wang. “This is a huge risk for the economies of both China and the United States, but it will be more disadvantageous to China, as China’s internal and external troubles are far more complicated than those of the United States.”
Wong said that China’s CPI has been low, reflecting weak domestic demand. “Li Qiang said that the CPI target is 2 percent, but at present, due to the sluggish investment market, the recession of the real estate market, the bankruptcy of a large number of small and medium-sized private enterprises, and the lack of consumer confidence among residents, these factors are obviously unlikely to drive up prices,” he said.
Unemployment
Regarding the targeted 5.5 percent urban surveyed unemployment rate in 2025, Wong said that the official surveyed rate does not reflect reality. “The surveyed enterprises are basically fully staffed, so the data is not convincing. Many unemployed young people do not look for work and do not participate in the survey.” He believes that “the actual unemployment rate may be as high as 30 percent or more.”Unemployment will only worsen in China’s deteriorating economic situation, he said.
Huang, a small business owner in China who only gave his surname out of safety concerns, told The Epoch Times that with the previous 25 percent tariff increase, additional U.S. tariffs have reached 45 percent, “which is disastrous for Chinese companies because Chinese companies have relatively high production costs, with very high land and labor costs.”
Doing business in China also has a hidden price, he said: the unspoken cost of having to collude with officials. “Under such conditions, Chinese companies are even less competitive in the international market.”
In response to the tariff war, Huang said, many Chinese factories have moved from China to Southeast Asia to avoid the higher tariffs and export quotas.
Wong said if the tariff war escalates across the board and retaliatory actions by both sides spiral out of control, U.S.–China trade may hit rock bottom and the U.S. and China may decouple completely. “For the United States, GDP may also fall by 0.5 percent or 1 percent. But China’s economic situation is much worse, which would be a fatal blow,” he predicted.
Government Debt
Li Qiang also said in his work report that this year’s deficit ratio is planned to be around 4 percent, 1 percentage point higher than last year; the total deficit is expected to be 5.66 trillion yuan ($781 billion), an increase of 1.6 trillion yuan ($220.7 billion) over last year.Li also said in the report that the Chinese regime plans to issue 1.3 trillion yuan ($179.3 billion) of ultra-long-term special government bonds, an increase of 300 billion yuan ($41.1 billion) over the previous year. Total new government debt this year will reach 11.86 trillion yuan ($1.66 trillion), an increase of 2.9 trillion yuan ($400 billion) over the previous year.
