China targets ‘around 5%’ GDP growth in 2025 and lays out stimulus measures as trade worries mount

China on Wednesday set its GDP growth target for 2025 at “around 5%” and laid out stimulus measures to boost its economy amid escalating trade tensions with the U.S.

Beijing raised its budget deficit target to “around 4%” of GDP from 3% last year, according to a copy of the government work report seen by CNBC, as the country’s top legislative body kickstarts its annual meeting.

The 4% deficit would mark the highest on record going back to 2010, according to data accessed via Wind Information. The prior high was 3.6% in 2020, the data showed.

The government report laid out a plan to issue 1.3 trillion yuan ultra-long-term special treasury bonds in 2025, 300 billion yuan more than last year. Another 500 billion yuan worth of special treasury bonds will be issued to support large state-owned commercial banks.

The report reiterated Beijing’s plan to adopt a “more proactive” fiscal policy and “appropriately accommodative” monetary policy.

In an implicit acknowledgement of sluggish domestic demand, Beijing also revised down its annual consumer price inflation target to “around 2%” — the lowest in more than two decades — from 3% or higher in prior years, according to the Asia Society Policy Institute.

The new inflation goal would act more as a ceiling than a target to be realized. Consumer prices climbed just 0.2% in 2024 and 2023, while producer prices have declined for over two years.

The country’s annual parliamentary gathering, known as the “Two Sessions,” started Tuesday with the opening ceremony of the Chinese People’s Political Consultative Conference — a top advisory body.

The National People’s Congress kicked off its meeting Wednesday and is expected to wrap up its annual session on March 11. The foreign minister and heads of several economic departments are due to hold press conferences in the interim.

This year’s parliamentary meetings come as Trump has imposed fresh tariffs on Chinese goods — an additional 20% in duties in just about a month.

Beijing on Tuesday responded with additional tariffs of up to 15% on some U.S. goods from March 10, and restrictions on exports to 15 U.S. companies. China also added 10 U.S. firms to an unreliable entities list that could limit their ability to do business in the Asian country. Many of the named U.S. businesses work in aerospace, defense or with drones.

“We hope to work with the U. S. side to address each other’s concerns through dialogue and consultation on the basis of mutual respect, equality, reciprocity, and mutual betterment,” Lou Qinjian, spokesperson for the third session of the 14th National People’s Congress, told reporters Tuesday morning.

“At the same time, we never accept any act of pressuring or threatening, and will firmly defend our sovereignty, security, and development interests,” he said in Mandarin, via an official translation.

The increased U.S. duties will weigh on China’s exports, a rare bright spot in an economy struggling with lackluster domestic demand.

While the world’s second-largest economy grew by 5% in 2024, retail sales growth fell sharply to 3.4% from 7.1% in 2023. The real estate drag persisted, with investments in the sector dropping by 10.6% last year, from the a year earlier.