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Chinese Premier Li Qiang speaks at the opening session of the National People's Congress (NPC) at the Great Hall of the People in Beijing on March 5. (Florence Lo/Reuters via CNN Newsource)
By Simone McCarthy and Nectar Gan, CNN
Beijing/Hong Kong (CNN) — China has set an ambitious target of “around 5%” growth for 2025, maintaining last year’s goal even as it braces for the fallout from escalating American tariffs on its export-driven economy.
The target “underscores our resolve to meet difficulties head-on and strive hard to deliver,” Premier Li Qiang, China’s number-two official, said on Wednesday as he delivered the government work report at the opening session of the National People’s Congress (NPC), the country’s rubber-stamp legislature.
Li gave his state-of-the-union-like speech shortly before US President Donald Trump began his first address to Congress in his second term, a split-screen moment between the two great power rivals, with both leaders laying out what they see as the best way forward to make their countries great again.
Beijing’s ambitious growth target reflects an effort to project confidence in its ability to stay the course, despite mounting trade pressure from the world’s largest economy and its mercurial president.
As thousands of Chinese delegates convened in Beijing this week, Trump escalated his trade war, doubling tariffs on all Chinese imports to 20%. This came just days after his administration threatened to tighten controls to keep American technology from funding China’s own tech ambitions.
Beijing swiftly hit back with retaliatory measures by imposing tariffs of up to 15% on selected American goods, expanding export controls to a dozen US firms and filing a complaint at the World Trade Organization. It also suspended imports of US logs and soybeans from three American companies.
Accompanying China’s countermeasures was a stern warning to Washington: “If the US insists on waging a tariff war, trade war, or any other kind of war, China will fight till the end,” a spokesperson for the Chinese Foreign Ministry declared on Tuesday.
Despite Beijing’s defiant tone, the increased tariffs, and the looming threat of tighter US economic and tech restrictions, have cast a long shadow over China’s slowing economy and its ambition to become a technological powerhouse. Li nodded to the challenges in his speech, noting the increasing tariff barriers and rising geopolitical tensions.
“The external environment is becoming more complex and severe, which may have a greater impact on the country’s trade, science and technology and other fields,” he said.
Li also acknowledged the myriad problems facing the Chinese economy at home, including insufficient demand and sluggish consumption. The world’s second-largest economy is grappling with a property sector crisis, soaring local government debt, cratering foreign investment, and high youth unemployment.
Struggling economy
In a notable move, China raised its budget deficit to around 4% of gross domestic product, the highest level in decades, in an effort to ramp up spending to counter the impact of US tariffs. It also lowered its annual inflation target to around 2% from the longstanding goal of 3%, in an acknowledgement of the deflationary pressures facing the economy.
Wang Yiwei, director of the Institute of International Relations at Renmin University of China in Beijing, said the “real objective” of Trump’s tariffs war was to undermine China’s status as the “world’s factory.”
“Many low-end, labor-intensive manufacturing factories in China are already struggling because their profit margins are thin. A 10% tariff hike will force them to relocate to countries like Vietnam or other neighboring regions, accelerating the hollowing out of China’s manufacturing industry,” he said.
Such industries employ a significant portion of China’s workforce, and their decline could pose a major risk to social stability, he warned.
On Wednesday, China also unveiled its 2025 military budget, which will increase by 7.2% to 1.78 trillion yuan ($245 billion), keeping pace with recent years. China has not reported double-digit growth in military spending since 2015.
The-CNN-Wire
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