China announces 5% growth target, increases defense budget

The annual general session of the National People’s Congress (NPC), China’s top legislature, convened today.

The opening session, held at the Great Hall of the People in Beijing, was attended by Chinese President Xi Jinping, Premier Li Qiang, NPC Chairman Zhao Leji, and prominent figures from the Chinese Communist Party (CCP).

At the opening of the 3rd General Session of the 14th NPC, Premier Li Qiang presented the government’s annual work report and draft budget to the assembly.

Li announced that they aim for China’s economy to grow by around 5% in 2025.

In the report, Li stated that they set the inflation target at 2% and projected the budget deficit to be 4% of the gross domestic product.

Li also expressed the goal of maintaining the unemployment rate at around 5.5% and creating at least 12 million new jobs in urban areas.

The government’s work report and draft budget will be voted on and approved at the closing session on March 11.

In his speech, Li said, “Changes unseen in a century are unfolding more rapidly across the world,” and added, “The increasingly complex and severe external environment may have a greater impact on China in areas such as trade, science, and technology.”

Li acknowledged “pressures on job creation and income growth,” admitting that “consumption has been particularly sluggish,” and pledged to “strongly boost” household demand.

The report stated that a “special action plan” would be prepared to stimulate consumption.

The targets announced on Wednesday were largely in line with economists’ expectations. China’s economy officially grew by 5% in 2024, meeting the target set at last year’s NPC. This followed comprehensive stimulus measures taken to combat sluggish household consumption and the real estate crisis.

Li also pledged to continue supporting high-tech industries and to enhance investment efficiency.

Lei Jun, CEO of smartphone and electric vehicle manufacturer Xiaomi, who attended the NPC as a delegate, told reporters that the company had invested approximately 105 billion yuan in research and development over the past five years. He emphasized that Xiaomi is a company that “benefits from the development of China’s manufacturing industry” and will “continue to adhere to the path of scientific and technological innovation.”

The draft budget presented by the Ministry of Finance to the National People’s Congress indicated that defense spending would increase by 7.2% this year to 1.78 trillion yuan (250 billion dollars).

The increase in defense spending is the same rate as last year’s budget. Last year’s draft budget stated that defense spending would increase by 7.2% in 2024 to 1.66 trillion yuan (230 billion dollars at the exchange rate of that day).

The growth rate exceeds the economic growth target of “around 5%” set by the government for this year.

China’s defense spending has increased above the growth rate every year since President Xi Jinping took office in 2013, more than doubling in 10 years. Nevertheless, this budget is less than one-third of the defense budget of the US, China’s biggest rival. At the end of last year, the US Congress approved an 850 billion dollar defense budget for the 2025 fiscal year. The annual general sessions of the Congress, along with the concurrently held general session of the Chinese People’s Political Consultative Conference, shape the country’s near-term political and economic direction. These meetings are referred to as the “two sessions.”

The assembly, elected for five-year terms, is holding the 3rd general session of its 14th term this year. The NPC is expected to discuss and approve the 2025 government plan, among other agenda items, including the national budget, before closing on March 11. The Foreign Minister and other ministers are also scheduled to meet with the press during the meeting.

The National People’s Congress, also known as China’s parliament, has 2,977 delegates. These delegates include representatives from the country’s cities, provinces, and regions.

While the NPC General Session convenes once a year, its legislative duties are carried out by the 175-member NPC Standing Committee, which meets every two months throughout the year.