China has set a GDP growth target of around 5% for this year as it grapples with a trade war with the US.

At Wednesday’s opening of the annual meeting of the National People’s Congress, China’s top legislature, Premier Li Qiang said all parties must work hard to achieve the “very challenging” target given the “increasingly complex” external environment.

Here are the highlights of the meeting:

Fiscal spending expansion

China will issue a total of 1.3 trillion yuan (about US$182 billion) of private treasury bills this year, up 300 billion yuan from last year, to stimulate the economy, according to a government work report submitted to the top legislature for discussion on Wednesday.

China has set the budget deficit to GDP ratio for this year at about 4%, up one percentage point from last year.

Foreign investment is encouraged

Li said that no matter how the external environment changes, China will persistently adhere to the policy of opening up, which will lead to more reform and development opportunities.

The Internet and cultural sectors will be opened up in an orderly manner, and access to telecommunications, healthcare, and education sectors will be expanded, he added.

According to Li, Beijing will encourage foreign investors to expand their investment in China and cooperate with companies up and down the industrial supply chain.

Private enterprises

Li pledged to better support the private economy and boost business confidence.

He said Beijing will strengthen legal protections and policy support for private enterprises and safeguard their legitimate rights.

It also pledged to crack down on profit-seeking law enforcement against private companies. He said China would build a “unified market” and fight competition.

Industries of the future

Li said China will unleash the creativity of the high-tech sector and boost artificial intelligence, smart terminals, and the Internet of Things, while 5G technology will be applied on a large scale.

He said Beijing will set up a mechanism for “industries of the future” to support high-tech fields such as biomaterials manufacturing, quantum technology, embodied intelligence, and 6G.

New role for Hong Kong and Macau

Li said Beijing will uphold the “one country, two systems” concept and support Hong Kong and Macau to develop their economies.

Li also said Beijing will support Hong Kong and Macau in deepening international exchanges and cooperation. This is a new addition to the work report this year, signaling a new role for the cities in preparing for external headwinds.

He added that Beijing would support integration with the mainland to sustain long-term prosperity while allowing patriots in Hong Kong and Macau to govern themselves.

The Premier emphasized the role of the Greater Bay Area, calling for leveraging regional development strategies to promote drivers of growth.

He urged all regions to build on their strengths and deepen industrial cooperation, while calling on economically strong states to take the lead.

Military spending unchanged

China’s top leadership has announced plans to increase military spending by 7.2% to about 1.784 trillion yuan (US$245 billion) in 2025.

This is the same percentage increase as last year and the year before, continuing a decades-long expansion in China’s military spending.

Over the past two years, the People’s Liberation Army has stepped up patrols near Taiwan, the self-governing island that Beijing has vowed to bring under mainland control by force if necessary.

Employment and consumption

Li acknowledged that consumption was particularly “sluggish” and noted that there were “pressures on job creation and income growth.” He pledged to “vigorously boost” household demand.

China will create more than 12 million new urban jobs to stabilize employment. Li pledged to provide targeted assistance to recent graduates, migrant workers, and those most in need.

He said the government would also take measures to stabilize the property market and the stock market.

Citizens and international friends

Li expressed his “heartfelt gratitude” to the people in Hong Kong and Macau, as well as compatriots in Taiwan and international friends.

He noted that the difficult geopolitical situation will affect China’s trade.

Li said the world is going through accelerated changes that have not been seen in a century.

The external environment is becoming increasingly complex and will potentially have a greater impact on the country’s trade, technology, and other sectors, he added.

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.

China’s leading electric vehicle (EV) manufacturer, BYD, has vowed to “work together” with rival Tesla to challenge gasoline-powered cars, while insisting that Beijing is “more open” to foreign business than the West perceives.

In an interview with the Financial Times, BYD’s Executive Vice President, Stella Li, stated, “Our common enemy is internal combustion engine cars. We need to work together to change the industry.”

Despite Li’s comments, the two automakers are competing to be the world’s largest EV group. BYD aims for rapid growth in advanced EV sales in Europe, offering a wider range of products than the US group. Tesla, meanwhile, has experienced a decline in European sales due to Elon Musk’s increasing political activism.

Speaking at a BYD showroom in London, Li said that despite rising trade tensions with Brussels and Washington, China is willing to share key technologies in EVs and autonomous driving with foreign companies.

“The Chinese government is more open, so maybe there are too many misperceptions here,” she said.

She added that the Chinese auto market is “the motherland of innovation,” urging foreign companies to come to China. “The government will support you and work with you to allow any technology to be realized,” she said.

Last month, BYD announced that advanced intelligent driving functions, via its “God’s Eye” autonomous driving system, would be available to customers on most of its models at no extra charge.

This announcement raised concerns across the industry about declining revenues for such driver-assistance technologies, with analysts predicting that the entire market will have to follow suit in the widespread adoption of intelligent driving functions.

The Warren Buffett-backed group is also making an aggressive push into European markets with plans for local production through factories in Hungary and Turkey, countering high tariffs imposed by the EU on imports of Chinese-made EVs. BYD is also planning to raise up to $5.2 billion through a share sale in Hong Kong to help fund its overseas expansion, according to a person familiar with the terms of the deal.

However, Brussels also wants Chinese companies to transfer intellectual property rights to European businesses in exchange for EU subsidies. Meanwhile, Beijing has signaled that it wants Chinese companies to limit some advanced overseas production in response to growing Western protectionism.

In recent years, China has gradually expanded its export controls, from restrictions on battery materials like rare earth elements to technologies and processes that convert refined rare earth elements into metals and permanent magnets used in EVs.

When asked about recent political developments in the EU regarding technology sharing, Li said she was not concerned about politics as it was “short-term” and consumers would ultimately choose the better product.

She noted that the Chinese government was helping with its overseas push and that all its innovations, including self-driving technology, would be available to global markets: “For every investment we make overseas, the [Chinese] government is very supportive [of us].”

Li said that BYD would offer European consumers options beyond EVs, such as the Seal U plug-in hybrid, as EV sales fall in leading European markets and hybrids are not subject to the EU’s anti-subsidy tariffs. It also plans to launch its Denza premium brand later this year.

According to Schmidt Automotive Research, BYD’s battery EV market share in Western Europe, including the UK, was 2% last year.

Li confirmed that BYD has no plans to introduce EVs in the US, where China imposed a 100% tariff on EV imports last year. On Thursday, US President Donald Trump announced additional tariffs on imports from China and confirmed that taxes would also be imposed on Mexico and Canada starting next week. Li said no decision had been made on BYD’s plans to build a factory in Mexico.

She stated that she was not concerned about a global slowdown in the transition to EVs as a result of Trump’s policies. Referring to the shift away from gasoline cars in China, she said: “Why do people now prefer EVs? Because it’s a better car, a smarter car… and of higher quality.”