Xi targets 5% growth for Chinese economy and increases defence budget to assert territorial dominance – UK Times

China has set a growth target of 5 per cent for 2025 despite mounting American tariffs and announced a 7.2 per cent increase in its defence budget as Beijing continues to build a larger military to assert territorial claims in Asia.

Chinese premier Li Qiang announced the optimistic target on Wednesday and delivered the government’s annual work report to the national parliament or the National People’s Congress.

The government has set 2025’s fiscal deficit target to around 4 per cent of the GDP, a jump from 3 per cent last year and the highest level in more than three decades.

Beijing has set the surveyed urban unemployment rate at around 5.5 per cent for this year, while the CPI is set at around 2 per cent, according to Chinese state media Global Times.

The Chinese government report has outlined plans to issue 1.3 trillion yuan (£142bn) of ultra-long special treasury bonds, up 300bn yuan (£32bn) from last year.

China will also issue 4.4 trillion yuan (£479bn) of local government special-purpose bonds in 2025, which makes it an increase of 500bn yuan over last year.

Chinese president Xi Jinping, who oversees the armed forces, has attempted to force through major reforms and removed senior military leaders including two former defence ministers and the head of the missile corps.

“In proposing these targets, we have considered evolving dynamics both at home and abroad and other relevant factors, including both what is needed and what is possible,” the report said.

The government, in its report, added that a “target of around 5 per cent is well aligned with our mid- and long-term development goals and underscores our resolve to meet difficulties head-on and strive hard to deliver”.

Premier Li outlined his draft for boosting China’s economy shortly before US president Donald Trump delivered his address to Congress, where he made his tariff policy the centre point of his talk.

A day earlier, the trade war between two nations intensified as China imposed up to 15 per cent tariffs on US agricultural goods in retaliation against Mr Trump’s additional 10 per cent levies on Chinese goods.

The work report outlined a slew of policy measures including adopting a more proactive fiscal policy and applying an appropriately accommodative monetary policy.

Chinese officials who drafted the government report told reporters that the 5 per cent growth target would require “very arduous work” to achieve due to growing external uncertainties.

Premier Li said the target “underscores our resolve to meet difficulties head-on and strive hard to deliver”.

“In setting the growth rate at around 5 per cent, we have taken into account the need to stabilise employment, prevent risks, and improve the people’s wellbeing.”

Beijing revised down its annual consumer price inflation target to around 2 per cent, the lowest in more than 20 years, in what is seen as an apparent acknowledgement of a sluggish domestic demand.

“It’s an ambitious growth target, and it means the authorities will still need to support growth,” Raymond Yeung, chief economist for Greater China at Australia & New Zealand Banking Group, told Bloomberg. “This number reflects authorities are determined to support growth against the backdrop of external uncertainties and trade tensions with the US.”

China’s military boost is the same percentage as last year and far below the double-digit percentage increases of previous years and reflecting an overall slowdown in the economy. China’s military spending remains the second largest behind the US and it already has the world’s largest navy.

The Pentagon and many experts say China’s total spending on defence may be 40 per cent higher or more because of items included under other budgets.

Tensions with the US, Taiwan, Japan and neighbours who have overlapping claims to the crucial South China Sea are seen as driving spending on increasingly high-tech military technologies. Those include stealth fighters, the country’s three – soon to be four – aircraft carriers, and a broad expansion of its nuclear arsenal.

China generally ascribes the budget increases to exercises and maintenance and improving the lives of its two million service people.

The People’s Liberation Army – the military branch of the ruling Communist Party – has built bases on artificial islands in the South China Sea but its main objective is asserting Chinese control over the self-governing island of Taiwan, which Beijing claims as its own territory.

Premier Li told the nearly 3,000 party loyalists that China still preferred a peaceful solution to the Taiwan issue, but “resolutely opposes” those pushing for Taiwan’s formal independence and their foreign supporters.

“We will firmly advance the cause of China’s reunification and work with our fellow Chinese in Taiwan to realise the glorious cause of the rejuvenation of the Chinese nation,” Li said.