Chinese government advisers are recommending that Beijing maintain an economic growth target of around 5.0% for next year, pushing for stronger fiscal stimulus to mitigate the impact of expected US tariff hikes on the country’s exports. .
The ambition to sustain a pace of growth that has seemed difficult to achieve throughout 2024 would surprise financial markets, which are betting on a gradual slowdown in the world’s second largest economy as trade tensions intensify.
Four of the six advisers who spoke to Reuters favor a target of around 5% for 2025. One recommends a target of “above 4%” and another suggests a range of 4.5% to 5%.
A Reuters poll this week predicted China will grow 4.5% next year, but also indicated tariffs could hit growth by up to 1 percentage point.
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The advisers, who do not participate in decision-making, will present their proposals to the Annual Central Economic Work Conference, held behind closed doors next month, when top officials discuss policies and targets for the coming year.
The growth target, one of the most closely watched indicators around the world for clues about Beijing’s near-term policy intentions, will not be officially announced until the annual Parliament meeting in March.
The advisors’ recommendations are considered by the authorities in the final decision-making process. The most popular opinion among them is generally adopted, although this is not always the case. Any plans could still change before the legislative session.
Most councilors commented on condition of anonymity as they were not authorized to speak to the press.
The maintenance of high growth targets in the face of the threat of tariffs of more than 60% on imports of Chinese goods by new US President Donald Trump suggests that Beijing is ready to spend big, especially if it cannot negotiate lower rates or postpone them.
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“It is entirely possible to offset the impact of Trump’s tariffs on China’s exports by further expanding domestic demand,” said Yu Yongding, a government adviser and economist who advocates a target of roughly 5%.
“We should adopt a stronger fiscal policy next year,” Yu said, adding that the budget deficit “should definitely exceed” this year’s planned level of 3% of gross domestic product (GDP).
Some economists have called on Beijing to abandon or adopt lower growth targets to reduce its reliance on stimulus, which has fueled real estate bubbles and huge local government debts. But supporters of ambitious targets argue that they are crucial to protecting China’s global stature, national security and social stability.
President Xi Jinping’s vision of “Chinese-style modernization” envisages doubling the size of the economy by 2035 from 2020 levels, potentially surpassing that of the US. Economists outside China do not believe this goal is realistic, but it still influences domestic policy discussions.
“To meet the 2035 targets, we need to achieve economic growth of around 5% in 2025,” said a second government adviser.
It is not known how many proposals of this type the government receives.
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